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Amazon, Priced for Perfection and Beyond

NEW YORK ( TheStreet) -- All companies have a target on their back. Even when the target occasionally falls off, competition is always just around the corner. Amazon's ( AMZN ) target became a little bigger and closer recently.

Selecting a consumer-driven company is never an easy task. Add a downturn in the economy and increased competitor price pressure, and selecting the winners from the losers becomes even more daunting.

The macroeconomic environment may not be the most important pivotal point, but will likely be the catalyst for a much lower-priced Amazon stock. Our current standard of living is higher than it should be. It's an undeniable fact, that our lifestyle is supported in part by borrowing money.

Real Money's Carolyn Boroden wrote "Stalking Amazon" on Real Money Pro -- If you don't have an account, here is a link to get one .

American households have figured out it's not a lot of fun when the music stops, and there aren't enough chairs to go around. Washington hasn't figured this out (they never will until forced).

I believe we will face the ramifications sooner rather than later. Once austerity does kick in, you can count on a GDP slowdown. It may be relatively small or high; nevertheless the piper will demand -- it's only a matter of when. Austerity will cause retail to slow down, leaving retailers to fight over fewer consumer dollars in the economy.

Other major companies compete in the retail space; both clicks and bricks are aggressively defending their market share, as well as seeking ways to exploit vulnerabilities in Amazon. For example, take the largest retail company in the world Walmart (WMT - Get Report) and recent announcements in strategy.

Walmart has taken online ordering to the next level with same-day delivery. This is currently in test markets and we can expect it to expand as logistics issues are streamlined. As consumers increasingly acclimatize purchasing online from Walmart, Amazon's rapid market share growth prospects fade quickly.

Walmart's price-to-earnings ratio is a modest 15, vs. Amazon's oxygen mask required 200+. While Walmart is a massive problem for Amazon, they are not alone.

A good friend of mine, TheStreet's Richard Saintvilus wrote a must-read Can Amazon Keep Defying Gravity? Richard and I don't always agree, but he always brings food for thought to the table.
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AMZN $659.59 0.00%
BBY $32.08 0.00%
WMT $66.87 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%


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