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.

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