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Love Amazon Stock as Much as Amazon the Company

NEW YORK (TheStreet) -- As predicted and as is often the case, (AMZN - Get Report) stock continues to rebound nicely after its most recent earnings-related drop. If you're a swing trader, there's no such thing as a sure thing, however buying AMZN on a "crash" bucks the hysteria and comes pretty darn close:

AMZN Chart AMZN data by YCharts

But, even with its stock performance and consumer marketplace ubiquity, lots of people like to dog Amazon. And they'll seek out every last factoid to do so.

Case in point -- over the weekend, a tidbit from a WSJ article (subscription required) made the rounds on Twitter (TWTR) among finance types:

Google's (GOOG - Get Report) wildly profitable; Amazon's not. We know this. Now somebody did the work to quantify it. Where does this leave us?

As of the most recent quarter, advertising accounted for 90% of Google's revenue. Granted that's down from 92% a year ago and the days of 96% and 97% thanks to, as Google puts it in the above-linked 10-Q, "growth of our digital content, such as apps, music and movies, and to a lesser extent, an increase in our hardware revenues." In other words, we're starting to make a little bit of money with Google Play, but not so much selling hardware or via Android. Though, to be fair, Android and related ventures presumably help generate advertising revenue.

That said, as Google looks to diversify its business to some extent, its primary business is advertising. If it slips up there, profits suffer and its stock will likely tank. That's the risk Google runs as a profitable one-trick pony on revenue. Interestingly, the diversification I speak of looks a heck of a lot like Amazon's business model.

Consider this Facebook (FB) post a friend of mine made the other day:

Along similar lines (and in true Amazon spirit), Google's giving a bunch of other "stuff" away to get a leg up on relative dinosaurs such as Microsoft (MSFT) . There's only one meaningful difference between Google's foray into delivering goods quickly and providing software and services to consumers and businesses and Amazon's core e-commerce business, its media ventures and Amazon Web Services -- Google has a visible and verifiable profit engine that fuels activities outside of what brought it to the dance. At Amazon, revenue -- not profit -- plowed back into the business facilities growth and expansion.

That's a simple way to look at it. Google is profitable, therefore it uses its profits to diversify, grow and expand. Amazon is not profitable, therefore it uses revenues to not diversify quite as much as it does to grow and expand. No matter how you organize the stock chart comparison, both names have been incredible investments, particularly over the long-term. Investors by and large keep their faith in two companies with opposite bottom lines, but not-so-divergent strategies.

If Amazon's business is so bad (by traditional definitions) why would Google bother getting into some hybrid of it? There's must be some value in conceiving Google Shopping Express to, at least in part, take on That value doesn't necessarily have to come from what your grandfather or drunk uncle might look to as a measure. Not to sound like your grandfather or drunk uncle, but these days ubiquity and the number of people who use/access what you do (which is sometimes reflected in revenue) is just as valuable as turning consistent profits. While that might be difficult for some people (and investors) to wrap their heads around, the big money -- clearly -- has spoken.

In my Southern California neighborhood, I still see more boxes and Amazon Fresh delivery trucks than I do Google Shopping Express minivans. However, the Google vans are becoming more ubiquitous. While it's cheap, quite a few of my friends (such as Kurt) are trying it out. From a business perspective, there's value in that even if there isn't immediate or foreseeable profit.

Paradigms change. Investing isn't about stubbornly hanging onto old ones. It's about treating the trend as your friend. And this has been one heck of a long trend. Long enough to stop the nonsense of I love Amazon the company, I just hate Amazon the stock. The corners of the market that continue to dog AMZN have missed out on a ton of upside in the stock. And for no good reason.

Ubiquity. Mass consumer uptake. These things carry as much cachet as profit in today's world. That's the only way you can explain the billions spent on acquisitions such as Yahoo! (YHOO) for Tumblr, Facebook for Instagram and WhatsApp or (ding, ding!) Amazon knocking Google aside for video game streamer Twitch. Clear path to profitability or not, private investors, stock market big whigs, hedge funds -- what have you -- they're all throwing their money in directions that buck what some investors perceive as rational on the basis of what they hold onto as righteous and logical tradition.

Follow @mynameisrocco

--Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola writes for TheStreet. He lives in Santa Monica. Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.


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