The Long and Short of It in War of Words on Amazon
If you want to witness a raging battle between investors who believe in a stock and short sellers who don’t, Internet retailer Amazon.com provides a great case study.
Take a spin through the Amazon.com message board on the Yahoo Finance Web site (https://finance.yahoo.com).
Message boards have become well known in recent years for the relentlessly bullish postings of individual investors touting the prospects of stocks that they own, and that they believe others should own as well.
The bulls were out in full force on message boards late last year when Internet stocks rocketed.
But since December, Amazon.com shares have lost two-thirds of their value, closing at $38.44 on Nasdaq on Friday. Deepening uncertainty about the company’s long-term outlook have weighed heavily on the shares.
Now, short sellers on the Amazon.com board on Yahoo are lobbing an increasing number of verbal grenades.
On the opposite side, longtime Amazon.com shareholders--known in market parlance as “longs”--are defending the company with equal vigor.
The message-board battle mirrors the contentious debate among analysts on Wall Street, where there are widely divergent opinions over when--if ever--the company will turn profitable and whether its e-commerce business model will prove to be viable in the long run.
One big difference, though: The language used in the message-board debate is a lot more blunt than it is on Wall Street.
“This thing is going down hard,” wrote one short seller recently of Amazon.com.
Agreed another: “Forty dollars is a ridiculous price for this stock with no book value and no profit forecast.”
One short seller summed up the feelings of his bearish compatriots on Friday: “If the shorts stick together and don’t cover [their short sales], we CAN drive this stock to the Rubbish Heap of History!”
Bearish investors use screen names that sum up their feelings quite concisely, such as one known as “amazonwillcrashnburn.” Another uses “amzn-is-sooo-1997.”
But for every short seller blasting the stock, there are many bullish investors who continue to defend it.
“I love it how shorts accuse AMZN of being a bloated pig,” wrote one bull. “But when [the company] moves toward profitability--look out. Scared shorts.”
Some short sellers got jolted in August, when the stock broke out of another decline to gain 38% for the month, ending August at $41.50.
But the decline has resumed with the general tech sell-off in September. Amazon.com fell 7% for the month. That has been enough to convince at least one more investor to short the stock.
Under the headline “Just Shorted,” one investor wrote Friday: “Sorry longs, but AMZN is heading back down to make some new lows. The nice thing about this stock is it has so little upside but so much downside. See you all in the low $20s.”
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Walter Hamilton can be reached by e-mail at walter.hamilton@latimes.com.
