Amazon falls back but valuation still defies sense

At the end of last week, Amazon (AMZN) reported a 68% gain in first-quarter earnings. At one stage during trading on Thursday the company's shares moved over $150 and at their current $143, they still trade at 47 times forward earnings. For the first quarter of 2010, Amazon reported net income of $299 million, or 66 cents a share, compared with net income of $177 million, or 41 cents a share, for the same quarter in 2009 and compared with expectations of 61 cents. Revenue grew 46% to $7.13 billion, ahead of analyst expectations of $6.87 billion. Operating margins were 5.5% compared to 5% for the same period last year.

For the June quarter, Amazon said it expects net sales to come in between $6.1 billion and $6.7 billion. Analysts had been looking for $6.4 billion in sales for the period.

Though Amazon is the undoubted king of e-commerce, it still seems extraordinarily expensive on normal valuation grounds e.g. p/e, book value. Though most analysts remain positive on this stock, any wobble in its sales, earnings trajectory will leave it exposed to a big move down. I love the company, but I don't love this stock price.