The Cult of

NEW YORK ( TheStreet) -- Recently, I wrote at Seeking Alpha that it might be fun to speculate on Amazon.Com ( AMZN) dropping after it announced its earnings. I expected it to miss analyst estimates and thought the stock would drop in response.

I was wrong. It rose substantially in after-hours trade.

Betting against Amazon has become a mug's game. Since the market bottom in late 2008 it has risen steadily from a low of less than $50/share to its present high of $265. This has not been accompanied by a rise in earnings, although sales have more than quadrupled. Like an old school dot-com start-up (and .com is still part of its formal name) the company seems to think it's losing money on every transaction but making it up on volume.

This drives conventional analysts batty. In When will the Madness End? asked The Motley Fool after the company's last earnings release.

Paulo Santos compares betting on the stock to buying a bad lottery ticket.

There are measures by which Amazon stock has a reasonable price. Compare its market valuation to its annual sales rate and you get about 2.5, well below the numbers for other technology companies including Apple ( AAPL) or Microsoft ( MSFT), and not terribly higher than Intel's ( INTC) 2.21.

But look at the same ratio in comparison to other retailers such as Wal-Mart ( WMT) and Costco ( COST) and you get a different story. Wal-Mart's figure is .59, Costco's .44.

Because Amazon is so technologically intensive it's hard to tell how to value it. Is it a retailer or a tech company? The price says tech company but the numbers say retailer. The "smart money" is selling Amazon, according to the Market Daily News, and the smart money is getting clobbered.

Chris Gaun of Gartner Group recently tried to uncover Amazon's cloud revenue number -- it's broken out only as part of "other" on the balance sheet -- and came up with $1.5 billion for 2012, far from the $3.8 billion figure offered by Australia's Macquarie Capital, which most Amazon bulls are betting on.

Still, assume Macquarie is right. Cloud remains a very tiny portion of the company's business, less than $1 billion/quarter this year when the whole firm averaged quarterly sales of $15 billion. Just like 24 times before, Amazon has lowered its cloud prices again , even on its fastest processing systems.

Of course, cloud computing is just one part of the Amazon technology story. It's also one of the leading streaming media companies, competing with Netflix ( NFLX). Rocco Pendola says Amazon could squash Netflix "like a bug" and, even with Netflix' recent explosive run up, its one-year performance still trails that of AMZN, 41% to 30%.

But what's streaming worth? Netflix' total revenue for 2012 were about $3.6 billion. Even if Amazon did as well, that and the cloud business are still just gnats on the balance sheet elephant.

So be generous and toss in the Kindle business. Pacific Crest told Barron's Amazon might sell 10.5 million Kindle Fire tablets in 2013 . That's revenue of $2.5 billion over the course of this coming year.

In his most recent conference call, Bezos said e-book revenue were $9.19 billion. Let's call e-books tech, too, and not retailing.

Now add it all up and, like I said, be generous. Add Macquarie's $3.8 billion in cloud to Netflix' $3.6 billion in streaming, toss in $2.5 billion for Kindle players and $9.2 billion in e-book revenue. That's $19 billion in technology revenue, from all sources, you can expect in 2013. did $21 billion in revenue during the fourth quarter of 2012 alone, writes.

Figure you're paying Wal-Mart's valuation on the straight retail sales, take out all its cash, about $5 billion, and you're still paying $90 billion for a tech business that may do $19 billion in business this year. That's a ratio of 4.5 times sales.

There are crazier prices on the technology board. Facebook ( FB) shareholders pay 18 times revenue for their shares. But you can get Google ( GOOG) for 4.95 times sales, and Oracle ( ORCL) for 4.52 times sales. That's real tech revenue, every dime of it.

Personally, I love Amazon. I think it's worth $200/share, which by my very optimistic, back-of-the-envelope calculation still comes to a valuation comparable with that of Apple. But it's no surprise that, to people who do this for a living, Amazon's stock chart looks a lot like Netflix' from 2011, just before its fall. It's a cult classic, and investing on it at these levels could prove a very scary movie indeed.

At the time of publication the author had positions in MSFT, GOOG, INTC, AAPL and COST.

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