We love Amazon as a company.Â However last year the abrupt move from $40 to $80 caught us off guard.
We’ve watched it closely and continue to like it but… lately there have been some major outages.Â Not just the ones that got headlines but quite a few more.
Speculation is out there about what might be going on but facts are few.Â If Amazon is having infrastructure problems we have no doubt that they will figure them out and come back as strong as ever.Â However until we know more we think it’s best to avoid the shares.Â In fact we just took out a small short position.
Amazon is all about their infrastructure and while web services have not been impacted as far as we know they are certainly losing business from the public and the non-public outages.Â
In addition we might be in a bit of a lull as we enter the summer season. Kindle is very interesting but it’s early for it to move the needle much.Â Also other firms, like Google, are entering the fray with potent alternatives to Amazon EC2 and S3.Â
Valuation is an issue here as well with the stock trading at levels that leave it vulnerable to selling in a rough market looking for excuses.Â Any more outages or other issues could send the shared down sharply.Â
We remain long term buyers on Amazon as a company but are keeping a neutral/negative postion for now.
— Kris Tuttle