While

Amazon.com's

(AMZN) - Get Report

stock had a bad year, the final week helped assuage some of the pain. But investors shouldn't expect the stock's resurgence to carry over into 2005.

Amid upbeat general reports on online holiday shopping and the company's own holiday season, shares of Amazon rose about 14% in the last week of the year, despite a slight drop on Friday. Since hitting their nadir for the year in October, Amazon's shares have shot up 34%. The gains helped to pull up the stock's performance: It ended the year at $44.29, off just 16%.

But that momentum may be hard to sustain. Much of the recent rise seems to be coming from shorts taking money off the table, some investors say. Meanwhile, many traders are questioning whether Amazon deserves the same pricey multiple as other Internet stocks.

"I don't see any real catalysts for the stock" that could push it higher, said Scott Rothbort, president of LakeView Asset Management and a contributor to

TheStreet.com's Street Insight

. (Rothbort does not have a position in Amazon's stock.)

Amazon's stock missed out on the gains posted by many Internet names this year. Shares of rival e-commerce player

eBay

(EBAY) - Get Report

, for instance, ended the year up 80%. And since their debut in August, shares of

Google

(GOOG) - Get Report

have risen some 127%.

Yahoo!

(YHOO)

finished the year up 67%.

But it wasn't just the big players that saw their stocks soar. Shares in

Overstock.com

(OSTK) - Get Report

closed the year up 247%;

eCost's

(ECST)

stock rose 175% since its August IPO.

Despite that poor relative performance, Amazon is still trading at a heady multiple. The company is valued at nearly 49 times its expected GAAP earnings this year. Although Yahoo! and eBay trade at far higher price-to-earnings ratios, they've also posted stronger earnings and revenue growth than Amazon.

Meanwhile, most retailers trade at a multiple of less than 30. Amazon "is being priced like an Internet stock, but really it's a retail stock," said Rothbort.

The company has had a lot of good news at its back of late. Recent reports

indicate that e-commerce sales grew at well over 20% this holiday season. Amazon itself said earlier this week that it had its "best Christmas" ever. Following the report, Bear Stearns

upgraded the stock to outperform from peer perform and raised its price target on Amazon stock to $55 a share.

But some investors suspect the company's shares also benefited from short-covering. As of Nov. 8, investors were shorting some 10% of the Amazon's float, according to

Reuters

. With the stock down for the year, shorts have had a good run with the stock.

"I was short, I covered. I'm guessing others did the same," said one hedge fund manager, who asked not to be identified. "People

were closing out positions by year end." (The fund manager has no current position in Amazon.)

But these benefits will likely evaporate in coming months. As Amazon has matured, its financial results have become increasingly marked by seasonality. That means that while the company will likely report big fourth-quarter gains, it could have a difficult time following that with similar performance in subsequent quarters.

Part of Amazon's problem is that, with the exception of electronics, it has had little success branching out beyond sales of its core media products, said Jeff Matthews, a hedge fund manager with Ram Partners and a contributor to

Street Insight

. The company has attempted to diversify its offerings in large part through convincing other retailers such as the

Gap

(GPS) - Get Report

,

Circuit City

(CC) - Get Report

and

Toys R Us

(TOY)

to sell through its site.

But many of those companies are finding that they can attract online customers more effectively by buying advertising on sites such as Google, said Matthews, who has no position in either Google or Amazon. As a result, Amazon is going to have even more trouble expanding beyond its core offerings.

Retailers and consumers "don't need to go through Amazon any more," Matthews said. "Amazon will never be what it was. The world has passed it by."

While institutional investors with big stakes in Amazon will probably prevent its stock from falling too low, said Rothbort, the shorts will likely return if its stock goes up too high, putting a ceiling on how much the company's shares will rise, he said.

"Frankly, I think the stock's going to trade in a range," Rothbort said.

But not everyone is bearish. The nameless hedge fund manager is looking for a correction in Internet stocks in the second quarter of 2005, as they report results affected by the increasingly seasonal natures of their own businesses. Ironically, because Amazon's stock did so poorly relative to the company's Internet peers this year, shares in the e-commerce giant could be a sort of safe harbor amid the selloff, the fund manager said.

"The sector can't charge up another year," the fund manager said. "I just see less downside in Amazon."