This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Amazon Stock Is Still Music to My Ears

Stocks in this article: AMZN P AAPL NFLX WMT BBY BKS FB GOOG

NEW YORK ( TheStreet) -- Not a day goes by without some analysts complaining about Amazon's (AMZN) valuation and how much the company spends each quarter. I know that tune won't change anytime soon. Those complaints helped send the stock down 9% for the year to date as of Friday's close.

Well, according to published reports, Amazon has begun discussions with record labels about a music streaming service to go along with its Prime movie streaming business.

The company wants to take on Pandora (P), Spotify and Apple's (AAPL) iTunes Radio. If this is true, you can expect an impact on Amazon's quarterly earnings -- not to mention a possible hit on margins due to the costs this would require. But so what?

The way I see it, Amazon CEO Jeff Bezos is introducing an effective marketing advantage known as bundling. To further differentiate Amazon's services, Bezos will be able to package Amazon's Prime service, its 2-day shipping, and now music streaming. All of this will be brought to you into a low-cost bundle consumers are certain to buy.

Would Netflix (NFLX) be able to compete with this service? Netflix charges $7.99 per month for (only) movies and TV shows?

Jeff Bezos is not dumb. He has killed off traditional booksellers and disrupted the entire retail space because he knows exactly what he's doing. But I'm now hearing notions that Amazon's ambitions are getting misguided. And the company's stock price is once again the major drawback.

I won't disagree that Amazon's P/E ratio of 610 pales is vast compared to, say, Apple's multiple of 13. But I also understand that to draw up valuation fears in the tech sector ... well, you might as well complain that water is wet.

Amazon's stock has always been expensive -- and the Street has never cared. It seems counterintuitive that we would begin to care about Amazon's stock now when CEO Jeff Bezos has introduced (among other things) the idea of drone-delivered packages.

Sure, earnings aren't spectacular. Margins have underwhelmed, to put it mildly. Even so, Amazon continues to grow year-over-year revenue at a 20% clip. If this performance wasn't seen as "routine" the Street would be celebrating how amazing that actually is.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

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.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs