The current investor debate over Amazon (AMZN) right now ultimately amounts to a tale of two realities.
In the near-term, Amazon is likely to miss bloated earnings expectations … for the same reason you should be bullish on the company over the long-term. In other words, the ginormous $385 billion online retailer is spending tons of money now to further reinvent the future of consumer spending.
Consider the size of Amazon’s customer base already:
· Amazon sales amounted to 27.6% of U.S. Retail Sales (ex-Auto, Food Service & Gas) or $29.6 billion
· 49% of US households have Amazon Prime, versus 29% just three years ago
In the near-term, however, that spending in Amazon’s customer base is slowing. In the video above, Hedgeye Retail analyst Brian McGough explains why:
“I don’t think anyone is bearish enough over the near term. Over the long term, by a country mile, I don’t think this business model is understood. As such, I don’t think investors are bullish enough. Unfortunately, the near term bearish comes before the long-term bullish. That’s also your opportunity.”
Other retailers are increasingly grappling with the behemoth every day. McGough explains why companies from Wal-Mart (WMT) to Gap (GPS) and Netflix (NFLX) to Apple (AAPL) are being handicapped by Amazon’s dominance.