The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Amazon Stock Analysis

Terrific Q3 Earnings From Amazon Receive Terrific Thumbs-Up From Investors

Amazon’s posted terrific numbers in its latest earnings report.

The $25.4 billion net sales for Q3 2015 is 23% Year-over-Year higher.

Q3 2015 EPS was also $0.17, a great improvement of Q3 2014’s loss of -$0.95.

AMZN’s price got terrific response from investors. After hours trading pushed AMZN beyond $600.

Amazon’s (AMZN) surprise beat on revenue and EPS estimates last Thursday got a terrific response from investors during the after-hours sessions. Amazon’s momo-like valuation (818x P/E) even got higher during after-hours sessions yesterday when investors gave AMZN a big thumbs-up by bidding the stock to close at $618.10.

The 23% Y-o-Y increase in 2$25.4 billion net sales compared to last year’s Q3 2014 quarterly revenue shows Amazon’s original razor-thin-only-operating-margin business model continues to fuel its momentum. The after-hours trading chart below from CNN Money is a study in great contrast. Amazon, the original messiah of revenue-growth-before-profit-margins still has many faithful bulls.

(Source: CNN Money)

Why Amazon Matters

Many investors still love the almost-zero margin strategy of Amazon like there are many investors that also love the high-margin advertising-heavy business of Google (GOOGL), and software-driven revenue stream of Microsoft (MSFT). These three firms outstanding earnings reports yesterday greatly helped build up the bullish run-up of the stock market yesterday.

Bezos’ original vision two decades of offering the cheapest products through an online portal remains relevant and appreciated by majority of investors. America’s biggest fund managers and retail investors would not be giving AMZN such a high valuation if they no longer believe in this idea.

The future of Amazon therefore is for it to stay true to its original mission of providing people the most affordable way to shop for products. Let us not forget that the multi-trillion-dollar online shopping business is still a growth industry. Amazon’s willingness to sell online goods at razor-thin margins will continue to help it remain the go-to online portal for e-commerce.

The unabated shift toward online purchases by more people tells us that we could all expect Amazon’s rapidly-increasing revenue performance to continue for many years to come. Let us also not forget that Amazon’s revenue stream is not yet global-wide. Once Bezos starts offering the Amazon marketplace in more countries, the chart revenue chart below will just a pocket change to the potential revenue streams from an Amazon that sells goods to every customer in 150 countries.

The main attraction of Amazon as a leader in e-commerce is also its robust amount of loyal third-party partner vendors. Almost half of the total goods bought on Amazon’s e-commerce platform are sold by third-party vendors. This is again a show of force of that Amazon’s low-margin-policy-will-make-you-prosper mantra is supported by many online sellers.

My point is that the e-commerce player with the most amount of loyal third-party vendor team mates will eventually triumph. Many hedge fund managers keep Amazon at a momo stock-like valuation partly because of this fact that Amazon can retain the loyalty of its biggest third-party vendor partners.

Amazon’s amazon double-digit revenue growth for the past years would not have been made possible if third-party vendors abandoned it for eBay (EBAY) or other online marketplaces. The chart below again illustrates why Amazon’s low-margin-direct-online-selling helped it greatly outperformed eBay’s auction-focused business model in the last decade.

The chart above also just how investors pushed AMZN’s stock price above $600 while eBay’s stock largely remained stagnant for the last 10 years.

My Takeaway

Amazon’s recent breach of the $600 price level is just a terrific evidence that this two-decade old company will continue to enjoy a momo growth ticker valuation for the next succeeding years. Any investor who has AMZN in their portfolio should hold on to their shares. The next earnings report might again inspire Bezos’ loyal followers to push AMZN’s price higher.

It is my professional opinion that Amazon’s growth-first-before-profits will remain popular among the biggest investors who decides which stocks get to be the long-term darlings of the stock market. This Hold recommendation for AMZN is also in line with neutral the short-term forecast of I Know First.

I Know First is calling for a Buy for AMZN in the near-term scenario but it is warning the stock is unlike to improve on its current price level after 1 year period. As it shows in this past forecast of Tech Stocks the Algorithm predicted a correct 88% return on Amazon.

As per my old Statistics professor, the basic tenet of predicting the future is always to refer to the past. Past performance said Amazon has never failed to deliver annual increases in revenue for the last 10 years. A increase in revenue always favor a bull run response for AMZN.

I understand market psychology is widely prevalent among stock market players. Right now I see Amazon still worth a Buy because of its favored darling status among investors and professional analysts. The sell-side community will be stupid to dare short AMZN when the most influential Wall Street Opinion makers are all screaming a Buy for AMZN right now.

(Source: TipRanks)

I therefore conclude that AMZN is a safe momo-stock to own. Not many investors are brave enough to short it.