The Five Dumbest Things on Wall Street This Week
1. The Proof Is in the Pudding
Amazon.com (AMZN) is getting its just desserts.
Big selloffs are nothing new for Amazon, which at the height of the Internet bubble once fetched a split-adjusted $113 a share. But the latest swoon shows Wall Street isn't buying CEO Jeff Bezos' growth strategy.One sore point is the Amazon Prime promotion that gives users a year of free shipping after they pay a one-time fee of $79. Analysts believe Amazon Prime is crushing profit margins by boosting shipping costs. But Bezos stoutly defends Amazon Prime. "We see an increase in sales from those Amazon Prime members," he said on Tuesday's post-close conference call, "and it deepens our relationship with those customers." Deeper still is Bezos' rationale for Amazon's recent push into the low-margin grocery business. With the stock down 44% this year, Amazon holders aren't eager to take on Wal-Mart (WMT) on its home turf. But Bezos touts Amazon's vast grocery selection and notes "extremely positive" consumer reaction, according to a transcript on seekingalpha.com. "We don't just carry a few flavors of Jell-o," Bezos continues, hammering his point home. "We carry all 80." Sweet dreams, Jeff. Dumb-o-Meter score: 93. More clear reasoning: Amazon aims to find "elements that matter to customers that are durable in time, where we can build flywheels that we can continue to put energy into," Bezos explains on the call. To view Colin Barr's interview about the Five Dumbest this week, please click here.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV