We Thought About Why Investors Are Hating Costco Right Now -- All Answers Pointed to Amazon

Oh, Costco (COST) .

Costco Wholesale Corp. shares were down more than 1% Monday afternoon following a downgrade from analysts at BMO Capital, who anticipate the big box retailer's stock struggling against Amazon.com Inc.'s (AMZN) onslaught against the entire retail sector. 

"In this asymmetrical environment, we believe it's difficult to argue that the stock will outperform despite our continued outlook for comp upside and strong fundamentals," the firm wrote. 

Here is why investor sentiment is souring towards Costco in favor of more millennial-friendly Amazon. Costco's stock has plunged 16% over the past month, lagging Amazon's 4% gain. 

A future of millennials.
A future of millennials.
Millenials have less of a need for buying in bulk.

Millenials don't need to buy products in bulk as much as their parents who were providing for families once did. After all, millennials are having much smaller families if they decide to have them at all.

Plus, as more millennials move to cities from suburbia where Costco stores call home, where would they store 100 paper towels anyway? Millennials often find that's just easier to order from Amazon as they need products.

Costco's website isn't where it needs to be.
Costco's website isn't where it needs to be.
Amazon's website is what Costco should aspire to be.

Everyone knows millennials are lazy and would rather do their shopping online. Unlike Amazon, and a recently revamped Walmart Stores Inc. (WMT) website, Costco's web experience is nothing to write home about (based on our trolling).

Costco needs to get with the times and upgrade its user interface and online services.

Whole Foods aftermath.
Whole Foods aftermath.

Amazon's recent acquisition of Whole Foods Market Corp. (WFM) has the market spooked when it comes to retail. Wall Street envisions Amazon openings hundreds of Whole Foods stores, where you can easily sign up for Prime and receive a free organic food gift. 

That could be a bad world for Costco to live in.

Costco's valuation is excessive.
Costco's valuation is excessive.

Costco shares are selling at 25 times earnings and that's weighing on the stock, according to TheStreet's founder and Action Alerts PLUS charitable trust portfolio manager Jim Cramer.

"You would like to see that multiple come down before you take a stab because that's a very rich multiple for any retailer," Cramer said.

In light of the impact of Amazon's purchase of Whole Foods, the reality is that Costco's stock should trade on a cheaper multiple. 

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