Does Amazon.com, Inc. (AMZN) or Netflix, Inc. (NFLX) Crack First?

The company is also well aware of the challenges it faces from Amazon and Google. It has its own open source cloud platform to compete with Amazon, it’s extending its reach into many places through appliances like Google’s, and it’s offering cash prizes to developers who can extend that platform.

Netflix made itself dependent on Amazon.com, Inc. (NASDAQ:AMZN)’s cloud, causing major outages over the last year, but under Neil Hunt it is continuing to install its Open Connect servers at major streaming points, pushing the location of Netflix content closer to customers throughout the U.S. and Europe. The company is increasing its integration with Facebook to make the service more social. This is why the Fool’s Tim Beyers calls Netflix “one of the best companies in America.”

Still, at its current price Netflix, Inc. (NASDAQ:NFLX) is pretty rich. It needs significant growth, on both the top and bottom line, to justify it.

Which Do You Short

If I were to short either of these stocks – and I don’t short – I would short Netflix, Inc. (NASDAQ:NFLX). It is far more volatile, and volatility cuts both ways.

I am among those who question how far and fast the bull can run when government policies are cutting 2.5% out of GDP, with the bulk of the impact expected in the next quarter. Barring a reverse of that policy – the end of the sequester – I expect a market correction around May.

When that happens I will be watching both these stocks closely. I would like to get back into Amazon.com, Inc. (NASDAQ:AMZN), and will be interested to see what Netflix, Inc. (NASDAQ:NFLX) does, because I actually like some aspects of their technology better. My own buy price for Amazon, as noted, is about $230, and I might nibble some Netflix about $100. But the former is $33 below current figures, and the latter is $86 below, so for now I’ve got lots of cash to play with.

The article Does Amazon.com or Netflix Crack First? originally appeared on Fool.com and is written by Dana Blankenhorn.

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