This Day On The Street
Continue to site right-arrow
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!

Nasdaq Sniffles and Amazon Gets Pneumonia


NEW YORK (TheStreet) -- During the last month, the Nasdaq has caught a cold. Before Wednesday's turnaround, it was down about 5%.

Amazon (AMZN), meanwhile, has caught pneumonia. Its shares are down over 10% during that time, and have fallen 17% for the year.

The stock was recently trading at $330.14, down 1.7%.

Amazon has become a proxy for the Nasdaq's troubles, because it is managed for growth instead of for profits and growth slows as a natural consequence of numbers getting bigger.

My own trading view, however, is often wrong. In January, I wrote that you should buy shares of Amazon, and everyone sold. The stock is down about 8% since my call.

The company, which reports earnings on April 24, is in great shape. Analysts are expecting first-quarter revenue of $19.4 billion, 21% higher than last year. They also expect a profit. Should Amazon fail to meet those estimates, expect another leg down in the stock price.

In the first quarter, Amazon raised the price of its Prime service from $79 a year to $99 and introduced a set-top box called Fire TV that also plays video games. This month, it announced Dash, a scanner that lets you build a shopping list by just pointing to products in the house.

Dash works with Amazon Fresh, a service in major West Coast markets that offers grocery shopping, including fresh fruits and vegetables, for $299 a year, a price that also buys you Prime. Amazon is expected to expand the service to other major markets.

The decline in Amazon's stock has brought the company's market valuation close to two times sales, which is still four times higher than a traditional retailer such as Costco (COST). It's about the same price-to-sales ratio as IBM (IBM). An IBM price with 20% revenue growth, is not a bad deal.

Amazon has been tossed aside along with other tech growth stocks such as Salesforce (CRM), Yelp (YELP) and Twitter (TWTR), all of which contributed to Nasdaq's decline.

Amazon, however, has a bigger competitive advantage than Yelp or Twitter or even Salesforce does, and Fire TV and Dash should add to that advantage. Still, Amazon faces stiff competition from Google (GOOG) and Microsoft (MSFT) in cloud computing, from China's Alibaba overseas, from Netflix (NFLX) in streaming and from Walmart (WMT) in retail domestically.

But a trader's pneumonia can be an investor's vaccine. Amazon is becoming investable.

At the time of publication, the author owned shares of Amazon, Costco and Google.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Select the service that is right for you!

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!


DOW 18,086.82 +56.61 0.31%
S&P 500 2,091.60 +9.72 0.47%
NASDAQ 4,810.5840 +37.1120 0.78%

Brokerage Partners

Rates from

  • 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