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Amazon on Fire From Kindle Sales, But Can it Last?

The Kindle Fire sold like hotcakes on Black Friday, but other factors may hold down Amazon.com stock, “Fast Money” experts said Monday.

“At the $199 price point, I think it’s very easy to see this device continuing to sell really well through the rest of the holiday period,” analyst Ken Sena of Eyercore Partners said. “The iPad had such a hold on the tablet market that to see the Kindle Fire actually rival and in some examples surpass the iPad is a bit of a surprise.”

The issue now, he said, was what impact the Kindle Fire will have on the company’s first-quarter guidance.

Last quarter, Amazon.com reported an operating margin below 1 percent.

“Once you do start to see some of that inflection occur, you’ll be layering on very strong revenue growth — 40 percent plus — in addition to margin expansion. I think at that point, the story looks very good,” Sena said. “We just don’t know when that inflection exactly will be.”

Sena said over the past two years, Amazon.com was trading at a 50 percent premium to its 200-day average.

“At this point this year, it’s below,” he said. “While there is excitement over the revenue of what the Kindle Fire could bring, I think there is some concerns over margin weighing down.”

In its favor, Amazon.com delivers customer purchases preloaded on the Kindle, which also provides a platform for future online purchases, Sena said.

“That bodes well for Amazon,” he said.

Looking at options activity for the day, trader Scott Nations said Amazon.com stock price found a floor.

“I think the interesting option play here, though, is in Barnes & Noble ,” he said.

BKS sells the Nook, yet another rival to the Kindle Fire.

Nations noted that four calls were traded for every put, with call volume at three times the daily average.

“I was really surprised. I didn’t think there was room for a third tablet option,” he said. “The stock is on fire and people want upside.”

Karen Finerman said the issue wasn’t whether the Nook was good.

“The question is: Can they make the transformation? That’s a much, much more difficult thing to do,” she said.

In a related note, host Melissa Lee noted Barclay’s “overweight” rating of Corning

.

“This is a name I think you can own here,” hedge fund expert Tim Seymour said. “Especially if all the things we’re saying about Apple and these guys are true.”

Joe Terranova called the sustainability of Corning’s strength into question.

“When you look at today’s price action in Best Buy it tells you that there potentially is not this overall sustained theme,” he said.


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Trader disclosure: On Nov. 28, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova; Long: VRTS, LQD, MUB, AXP, LULU, DECK, SBUX, CAT, CSCO, CAT, HES, EMC, IBM, SU; Adami: Long: NUE, MSFT, BTY, AGU, C, GS; Seymour: Long: AAPL, BAC, INTC; Finerman; Long AAPL & short calls, Long BAC, JPM-long stocks and leap options, YHOO-long stock short calls, IBM-long stock short calls; Short: SPY, IWM, MDY, SPY; Nations; long SPY, AMZN Call spreads, long volatility (by being long options but no VIX futures or options positions); Weiss: Long EUO, QCOM, NFLX Puts, HPQ, DE, MDRX

For Ken Sena
1. Evercore or an affiliate has acted as a manager or co-manager of a public offering of securities by this subject company in the last 12 months.

2. Evercore or an affiliate beneficially owns 1% or more of common equity securities of this subject company.

3. Evercore or an affiliate has a client relationship with, or has received compensation from this subject company for investment banking services in the last 12 months.

4. Evercore or an affiliate expects to receive or intends to seek compensation for investment banking services from this subject company within the next three months.

5. Evercore or an affiliate has a client relationship with, or has received compensation for non-investment banking, securities-related services from this subject company in the last 12 months.

6. Evercore or an affiliate has a client relationship with or received compensation from this subject company for non-securities services in the last 12 months.

7. The analyst(s) received compensation from this subject company in the last 12 months.

8. The analyst(s) or a member of his or her household has a financial interest in the securities of this subject company (this may include, September 28, 2011 without limitation, whether it consists of any option, right, warrant, future, long or short position).

9. The analyst(s) or a member of his or her household serves as an officer, director or advisory board member of this subject company.

10. The analyst or Evercore has an actual, material conflict of interest with this subject company.

11. An employee, director or consultant of Evercore Partners Inc. or one of its affiliates (but not a research analyst or a member of a research analyst's household) is a director of the subject company.

For John Roque
No disclosures

For Robert Sinche
FX Strategy is market maker is Euro currency and Canadian dollar

For John Stephenson
First Asset Investment Management Has Positions in Gold, G, FCX, HAL, BHI, RIG

CNBC.com with wires.

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