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Amazon: The Toughest Short in the Business

Jim Cramer

We read about a brilliant expansion into France. No matter that it costs a fortune to compete and profits are elusive for any company tampering with the vaunted French cultural apparatus.

We read about a brilliant expansion into cars. No matter that everybody who is trying to make money selling cars has failed because it's too competitive.

And we read about a brilliant new relationship with Microsoft (MSFT Quote - Cramer on MSFT - Stock Picks) to sell e-books. Cracker-jack deal, just money in the bank, as everybody will imitate Stephen King and dump their publishers to go it alone.

But there are two things we didn't read aboum, and they are all I care about, frankly. Sales and financing. You didn't read about sales because the book business, which is still Amazon's primary business, stinks right now. And the other businesses? Well, if Wal-Mart (WMT Quote - Cramer on WMT - Stock Picks) and Target (TGT Quote - Cramer on TGT - Stock Picks) and Kmart (KM Quote - Cramer on KM - Stock Picks) are getting their heads handed to them, do we conclude that everybody is shopping at Amazon? That's what the acolytes -- and there are many -- would have you believe. Retail is retail, whether you are online or in the mall, and retail's not very good right now. To put it mildly.

Ah, how about financing? Why don't we hear much about that? Everything about Amazon, in the end, is about raising more money to keep the machine running. Everything. Sure Amazon has enough money to last through Christmas. Sure it has a billion in the bank. But it needs every penny it can get if it's to stimulate enough sales for Christmas. Every penny and then some.

Which means it probably has to raise money again. Which is what all of this hype is about to begin with.

To which I say, nobody raises money like Jeff Bezos. He's the king of raising money. And I'm sure he'll again be incredibly successful, which is why so many analysts are rallying to the cause despite their virtual blackout when it comes to the company's near-term fundamentals.

So, do I think you should short this stock? Not on your life. Bezos came from the hedge fund business. He knows more about short-busting than anyone I've ever seen. He'll clean you out and gaffe you before you have a chance to cover. I hate being short this stock because it's so crowded. Way too many people betting against this one. So why bother? Because it's a retailer and we've made a lot of money being short retailers in 2000. I don't think this one will be any different. It is, however, a lot tougher.

Short-selling is for pros. But not for squeamish pros. Amazon is the toughest short in the business. You do what you have to with the stock, I'll do what I have to do. Understand that if I think retail is going to get better here, I'd recognize that this short is just too hard, and not worth it. I don't think it will be, though. So, to me, this is the leveraged retailer worth shooting against, until the fundamentals change. When I would just as soon go long, because, as long as Bezos is at the helm, Amazon will remain the ultimate PR financing machine.