The short of a lifetime!

David Stockman writes that Amazon is riding the biggest financial bubble in history.

We have been here before, and there is no better analogy than Cisco and its fellow shooting stars in early 2000 on the eve of the dotcom crash.

Indeed, Amazon’s $325 billion valuation is just plain irrational exuberance having one last fling. Spasms like this year $180 billion gain (125%) on the AMZN ticker or the $190 billion gain (55%) on the GOOG account are absolutely reminiscent of the final days before the tech wreck exactly 15 years ago.

...At the end of the day, AMZN’s current preposterous $325 billion market cap has nothing to do with the business prospects of Amazon or the considerable entrepreneurial prowess of Jeff Bezos and his army of disrupters.

It is more in the nature of financial rigor mortis——-the final spasm of the robo-traders and the fast money crowd chasing one of the greatest bubbles still standing in the casino.

And, yes, notwithstanding all the “good things it brings to life” daily, it is not the present day incarnation of even the mighty General Electric of the 1950s; and for one blindingly obvious reason. It has never made a profit beyond occasional quarterly chump change.

Not only has its net income been falling for five years, but what it has generated in the interim is actually a joke. To wit, during the last 23 quarters its has posted cumulative sales of nearly $380 billion but only $2 billion of net income, and half of that was in 2010.

That’s right. The Kool Aid drinkers in the casino are betting $325 billion on a massive e-commerce distributor of books and merchandise that has a steady state profit rate at 0.5% of sales.

...So, no, Amazon is not a profit-making enterprise in any meaningful sense of the word and its stock price measures nothing more than the raging speculative juices in the casino.

In an honest free market, real investors would never give a $325 billion valuation to a business that refuses to make a profit, never pays a dividend and is a one-percenter at best in the free cash flow department—–that is, in the very thing that capitalist enterprises are born to produce.

...When the big market break comes in the period just ahead, AMZN is sure to shed as much of its excess market cap as did Cisco after March 2000. That would be hundreds of billions of evaporating bottled air. It would be the short of a lifetime.

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