When looking at shares of Amazon, which just surmounted the $400 level, traders and analysts agree on one thing: Something has to give.
After all, this company is now worth $184 billion despite logging earnings per share of just $0.28 (making for a price-to-earnings ratio of more than 1,400). But while bearish traders believe the share price is due to drop, bullish analysts say that profits will rise as soon as CEO Jeff Bezos allows them to—which might not happen until the company becomes the world's dominant retailer.
One bear, Michael Khouw of Dash Financial, says that the company's fundamentals, even beyond earnings, simply tell a dour story.
"What most people are going to do is point to how expensive the stock is on a price-to-earnings ratio, for example," Khouw said. "You can't do that with Amazon, because they haven't had that much in terms of earnings—that's not what people are betting on. So maybe another way we might take a look at this is on a price-to-sales basis, thinking that someday the margin's actually going to show up."
Using a chart to illustrate his point about price-to-sales on CNBC's "Options Action," Khouw said Friday that "if you take a look at the longer-term chart, we are right near that high at almost 2.7-times sales. So if this is going to be our metric in terms of fundamental analysis, then maybe we're looking at the upper end of the range."