Why I am Shorting Amazon

Amazon shares have run up 40% since April 24. A move from below $45 to above $63. Earnings were much better than expected but, I hardly believe great earnings alone were responsible for this runup. Short interest of 16% and rising as of early April played a major role in my opinion. As the stock price soared, more shorts came in and eventually covered at higher prices which boosted the stock. As far as valuation, AMZN is trading at over 60 times 2007 earnings which is a little too expensive for my liking, especially for a company with at best 25% year over year growth over the next 3 years. If we look at stock price as a pendulum which swings wildly over fair market value, than I would think AMZN has swung a little too wildly to the north of its fair market value. AMZN was trading at $27 last August and the share price has more than doubled in less than 9 months. Famed investor Bill Miller of Legg Mason was advocating this stock when it was trading below $30 but, I believe he will be a seller at these prices and considering his fund own close to 5% of the company, any sales on his part will have a negative impact on the stock price. I think AMZN will see a share price of $50 in the coming weeks and I think a short position here is a fairly safe bet.