191–200 of 272 posts
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My AMZN shares are in a Roth IRA. I can wait.
Amazon stock trades at a P/E of 910. S&P 500 average is currently around 19-20. Do you really expect Amazon to continue to grow at such a rate that its current P/E is justified?
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Berkshire Hathaway. Microsoft until c. 2006. Apple. Google. Most hedge funds. Standard Oil and U.S. Steel if you go back to the last century. Basically, it's rational for a company CEO to invest all profits back into the business as long as he expects he can make a better return for them than the market can. Berkshire Hathaway's annual reports go into more detail in this. The trick is in recognizing the size of the m…
Thanks for your reply. Apple, and even Google, don't seem nearly as similar to Amazon in the question I asked. While they both invest heavily in R&D and other capex's areas, they also store a lot more cash (at least apple) and seem to report a lot more of a "profit" than Amazon. Do they re-invest _all_ profits or just a portion like most companies? People don't talk about Apple, Google, or Microsoft as companies that…
Amazon makes profit and immediately finances new warehouses/robots/etc. with it instead. Since this is not cash it is booked as zero profit from an accounting perspective.
Some investors like to complain about the lack of profit because turning it into an asset for the company to use makes it harder to give out to them as cash (dividend) but makes it easier for the company to grow. Many of the same investors use a flawed metric (P/E ratio) to saw that Amazon is effectively worthless, even though it dominates a market with huge revenue growth and a large amount of physical and virtual assets.
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Because you can sell it for more than you bought it for. Look at Warren Buffet's Berkshire: You would have doubled your money in 4 years if you bought in 2010. They've pretty consistently increased the value of their shares without paying a dividend in 50 years or so.
Absolutely understand what you are saying. But isn't that by definition a hot potato Ponzi scheme? I mean there are large monster e-commerce giants in other nations, it is a very real possibility that Amazon will have to battle with some company at scale who is also in the razor sharp margin mindframe. Its not impossible to imagine a world where amazon gets into a war with an Asian e-commerce giant for domination of…
Essentially, there's a philosophy among some CEOs that at current tax rates profitability is something to be avoided, but a healthy EBITDA and reinvesting the capex is the way to increase the shareholder value. The voluntary nature of capital gains tax makes stock buybacks or busines reivestment a more efficient mechanism of delivering value to shareholders.
I listened to a talk by Amazon's CTO, Werner Vogels, where he was explaining that Amazon's entire strategy is to build an infrastructure for itself, then rent that infrastructure out to its competitors. That way, increased competition can actually fuel your growth. The talk was about APIs, but Amazon views APIs as a general term: "Fulfilled by Amazon" is an example of a non-technical API. Likewise, I think Amazon's s…
You know what? Amazon, Werner and/or Benedict Evans can spin it anyway they want (like the kid who gets caught with his hand in the cookie jar) but the bottom line is they aren't making money and haven't pinned to a date they plan to do so. (So making arguments as far as one business unit vs. another don't matter many business operate the same way and in sum make money.) All the long winded explanation of the circums…
They have a healthy EBITDA, they're just choosing to reinvest their earnings, as they deem it's more efficient use of their capital than declaring a profit, paying a corporate profit tax off it, and then keeping the rest of the cash.
With Amazon, Bezos is deferring that profit-producing, investor-rewarding day almost indefinitely into the future. This prompts the suggestion that Amazon is the world’s biggest ‘lifestyle business’ – Bezos is running it for fun, not to deliver economic returns to shareholders, at least not any time soon. Sorry but that is ridiculous. Look at the stock price for Amazon. Anyone who has invested in Amazon has seen an a…
The idea is not new, and conglomerates have been around for quite a bit now, with most prominent example being Berkshire Hathaway. Take the profits of a textile company, reinvest them in a new line of business, take the profits from that line of business, reinvest it into a new one.
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Because you can sell it for more than you bought it for. Look at Warren Buffet's Berkshire: You would have doubled your money in 4 years if you bought in 2010. They've pretty consistently increased the value of their shares without paying a dividend in 50 years or so.
Berkshire Hathaway holds liquid assets though. It makes perfect sense that a holding company with $1B in liquid assets should have a market cap of $1B, and from there any growth in their holdings translates to a growth in market cap. There's a clear equity/stake relationship. There's even a clear speculative-equity/stake relationship. Amazon is completely different from that, no? A tremendous amount of their value is…
The bet that investors are making is that at some point the revenues and cash flow will be so huge that Amazon won't know what to do with them and at that point they will start showing a profit and perhaps even pay a dividend. It's not entirely unreasonable. Even Apple finally started paying a dividend once they got to 100 billion or so in the bank.
Noticing that Amazon only has 1% of the retail market is pretty crazy. the potential opportunity they have is staggering. It's not unreasonable to think at some point their will be profits to be had.
They package up and address individual items in shenzhen/guanzhou, stick them all in big containers, then when they reach the US/europe they deliver them by the cheapest means possible in a totally commoditised fashion. What competitive advantage does amazon.com have now? Why do all those small sellers need to exist? everything they sell is made in china anyway.
With Amazon, Bezos is deferring that profit-producing, investor-rewarding day almost indefinitely into the future. This prompts the suggestion that Amazon is the world’s biggest ‘lifestyle business’ – Bezos is running it for fun, not to deliver economic returns to shareholders, at least not any time soon. Sorry but that is ridiculous. Look at the stock price for Amazon. Anyone who has invested in Amazon has seen an a…
> Anyone who has invested in Amazon has seen an amazing unprecedented ride upward Only if they sell to realize those gains, and that can only occur if they can find a buyer who has an even greater expectation of profit in the future. This concept seems to elude people, but the value of a company that never makes a profit is precisely $0.
Selling the stock and being taxed on capital gains is a voluntary act that can be planned for accordingly. A company with zero profit also owes zero taxes at the corporate tax level, which makes reinvestments and stock buybacks a more efficient value distribution strategy.
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Where "becoming a giant, profitable company" is another way of saying "paying their shareholders". Amazon is making money, for all intents and purposes they are profitable. They've just found something more interesting to do with that money than pay dividends. The opponent in this scenario is the shareholders, they're the ones who want to take the money away from Amazon. It's a very interesting dynamic, certainly not…
> The opponent in this scenario is the shareholders, they're the ones who want to take the money away from Amazon. Take the money away from Amazon? The shareholders are Amazon. It isn't Amazon's money, it's the shareholders. If/when they want dividends instead of re-investment (which doesn't seem to be the case yet), they are entitled to it.
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Blimey. Fascinating. Sounds like a rather frightening and ruthless individual. Am curious. What would your nominations be for the Rockefeller of the tech (software/hardware) world? Ever thought about that?
Perhaps less frightening when you consider that he manage to cut the end-user price of kerosene by 90%.
Also a reminder that the term "visionary" is very relative to your horizon.