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Amazon: Bullish or Bull Crap?

Stocks in this article: AMZNCOSTNFLXQQQSPYTSLATWTR



Think Netflix (NFLX), Tesla Motors (TSLA) and Twitter (TWTR). All great companies. All cool products. But they all trade at insane valuations on the hope that one day they'll be making mad profits. 

If Bezos is good at one thing, it's bolstering investor sentiment. When he talks, you just believe. You say, Yeah, that's a great idea!

For starters, Amazon could simply raise the price of its beloved Prime service.

For $79 per year, customers get access to TV shows and movies (but not all of them), can borrow Kindle books, and of course, have free two-day shipping. The service was introduced in 2005 and has yet to see a price hike. 

But in the most recent conference call, it was made apparent that that may change, as it should. Look at Costco Wholesale (COST). The company has hiked its membership fees twice in the past eight years, (12% in 2006 and 10% in 2011).

Still, the company experienced very little churn. Although one could argue that customers have to have a Costco membership to shop there, which is not the same case with Amazon.

Even with a membership hike to the $99 to $119 price range, Amazon runs the e-commerce world. When I want to buy something, the very first place I go is Amazon. It's amazing the selection it carries. 

And it's not just in the U.S. The company is rapidly moving overseas, and is quickly unraveling the successful business models for most bricks-and-mortar retailers that have worked for decades. 

If the online shift wasn't all that apparent before, it certainly was during the most recent holiday season. Sure, Amazon missed earnings, but the shift to online and mobile is happening in a big way. In other words, Amazon might have lost the battle (earnings-wise), but it's winning the war. 

In my article "Bricks and Mortar Died. Where Did It Go?" I detailed this enormous shift to online spending. And guess which company is leading the charge?

Of course, Amazon. 

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