How High is Too High for Amazon?

Many investors seem to be getting a little scared of heights as Amazon hit it’s all time high of approximately $400 on December 2nd. The stock trades at a relatively high price to book value and there are many that are afraid of the direction that Steve Bezos is taking the company with all this talk about delivery drones. Ridiculous as this idea may seem to be, I feel that the pros with this online retail behemoth outweigh the cons.

2013 Cyber Monday Sales came in at 35% above sales on the same day in 2012, which hints at a very positive December. Yes, the price to book value or price to earnings ratios may seem a bit out of whack, but I must say that if you’re looking to invest for value, Amazon and for that matter, any ecommerce/tech company is not the type of company for you. With the shift to online shopping still growing amongst mobile users, I don’t see any reason why Amazon would not be able to capitalize on this trend in a very significant way. Also adding another layer of comfort is the search volume for the term “Amazon” is in a clear uptrend and that the spike in searches from November to December 2013 was greater than the search spike for 2012 and increasingly greater than the spike of 2011.(Also see “Cyber Monday Search Volumes“)


There really are a multitude of ways to interpret this data, but I believe the most reasonable interpretation is that more and more users are making purchases online and choosing Amazon as their marketplace of choice and Delivery Bots, whether they succeed or fail as a value add to the business, will not affect the nature of their business.

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