The Fire, he said, "does a very good job" of allowing people to surf the Internet, access Facebook, and watch videos. The important thing, he said, will be tracking the improvements in the second and third versions.
"The original e-reader had a lot of flaws," he said of Amazon's first Kindle, a new version of which is selling for $79.
Mahaney maintains a "buy" rating on Amazon stock, despite its valuation.
"There's no question Amazon earnings are depressed," he said, adding that one can look at the company as a cyclical stock.
"Amazon is going through a major investment cycle, building out a 30 percent expansion in distribution centers," Mahaney said. "Look, they wouldn’t be doing this if they didn’t see dramatic pickup in demand."
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Mark Mahaney does not own Amazon shares, but Citigroup has been provided investment banking services for Amazon.