NEW YORK (TheStreet) -- I recently read that Amazon.com (AMZN) - Get Report was the most successful Internet stock IPO in history.

This is based on its initial public offering price, initial market cap, and its current $236 share price and almost $107 billion market cap.

If the Olympics currently being held in London had a category called "Large-Cap Stock with Most Inflated Price" it's possible Amazon might win a medal. If you're an investor, this might not be a laughing matter.

Speaking of stocks that were Internet IPOs,

Yahoo!

(YHOO)

came public around the same time as Amazon, but didn't fare so well. Today, Yahoo! has a share price of $15.98 and a market cap of less than $20 billion.

It's not exactly an "apples-to-apples" comparison, but Amazon as a company is valued at almost 12 times more than Yahoo! Using this

Yahoo! Finance comparative chart you get the picture, and with this chart a picture paints a thousand words.

The stock market has voted with its wallet and claims Amazon.com deserves a P/E ratio (currently at 287) 16 times higher than Yahoo!'s pitiful PE of only 18.

Going forward a year, the market believes Amazon deserves a P/E of nearly 84, and Yahoo! only deserves a P/E ratio of between 13 and 14. Is that rational? I know that John Maynard Keynes said, "Markets can remain irrational longer than you can remain solvent."

I'm also aware of the fact that Amazon had an unusual second-quarter earnings report. Unless I misunderstood, the online retailer's earnings fell 96%, which supposedly reflected heavy investments in its business.

Yes, I was impressed that revenue grew by an impressive 29% to almost $13 billion, which represents a trailing 12-month revenue-per-share of a whopping $120. In comparison, in Yahoo!'s second quarter its trailing 12-month revenue was down 1% and revenue per share was a paltry $4.05.

Yahoo! quarterly earnings growth dropped 4.4%, and it has had difficulties finding and keeping a competent CEO. The jury is still out on its current choice, 37-year old Marissa A. Mayer.

Amazon's shares bounced almost 8% higher on Friday after posting a higher gross margin and solidly beating its own guidance for operating income.

In a

Wall Street Journal

article Friday, the title surprised me. In bold letters the

Journal

proclaimed, "Amazon's Margins Evaporate" and, with a photo of CEO Jeff Bezos, readers were treated to a graph of Amazon's "Razor Thin" profits of a meager $7 million.

So profits and revenue were both below analysts' estimates, as was its forecast for the current quarter, which Amazon said would actually include an operating loss. As Robin might say to Batman "Holy Bottom Line!"

Amazon's profits for the second quarter were 1 cent per share. Gulp. Yet, analysts were only expecting profits of 2 cents per share! The share price of Amazon is beginning to look like a short-squeeze situation or a total mystery.

Amazon now has a profit margin (trailing 12-month) of less than 1% compared to Yahoo!'s 22% profit margin. Amazon's operating margin (trailing 12-month) is an anemic, almost depressing 1.17%. Yahoo!'s operating margin is almost 16%.

Now let me show you a chart going back to 2007 that compares Amazon's price to its profit margin.

Image placeholder title

AMZN Profit Margin

data by

YCharts

If you see what I'm seeing, the stock is in the stratosphere based on some potentially delusional expectations and what I understand to be some amazing future growth expectations.

Amazon's Kindle Fire is still the #1 selling product on its site, and the top 10-selling products on Amazon are digital products.

The

Journal

article stated, "People familiar with the matter have said the company is testing a smartphone with Asian suppliers that could compete with Apple's popular iPhone and provide a new vehicle for selling e-books, mugs and other items. Amazon has declined to comment on the matter."

So, that's enough to warrant a P/E ratio of 287 and a forward P/E ratio of 84? Not! Any way you slice the price of Amazon shares they appear to be absurdly over-priced and a top candidate for a blood-curdling collapse.

Just to compare apples to apples, here's a chart of the price of Yahoo! shares compared to its profit margin.

Image placeholder title

YHOO Profit Margin

data by

YCharts

Something is very, very wrong with this picture, or there's some esoteric information that analysts and investors aren't being told or can't see that justifies the mystery of Amazon's price metrics versus that of Yahoo!'s.

Time will tell, but if I was an Amazon.com investor I'd be feeling quite vulnerable right now. Maybe it's time to swap some Amazon shares for some Yahoo! shares?

At the time of publication the author had no holdings in the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Jim Cramer and Stephanie Link actively manage a real money portfolio for his charitable trust- enjoy advance notice of every trade, full access to the portfolio, and deep coverage of the latest economic events and market movements.