Folks, the reason why I'm posting to Compensation forum because Amazon TC includes lot of RSU. I did some comparison of stock indicators for FAANG companies, and it looks like Amazon PE ratio is quite high (almost double) compared to other FAANG companies and IT industry overall. It could be because of two reasons: Amazon investors are VERY confident (this is a positive sign, but not always the right), or stocks are overpriced and it could be some sort of correction soon. I understand you guys are techie (same as me), not the investors, but I'm interested for your thoughts about this. Also,will you get compensated by new RSUs in case of Amazon stocks correction. Employment contracts usually says "Certain number of RSUs" And also, because Amazon stocks for new Amazonians vested within 4 years, what about those new people, do they get more in case of correction?
Investors are bullish. All of these stocks are overpriced, Amazon the most so if all, but what people say something worth and are willing to pay is what it’s worth.
Yep amzn pe is insane and Jeff warned big investments are coming but an employee will jump here momentarily and say that book value doesn't matter :] in terms of comp amzn penalizes you for performance but does claim they will true up your equity if the price falls such that your actual comp is below your target. However (and only my .02) I imagine when this happens Jeff will probably say amzn is all of our company and we rise and fall together and therefore won't be issuing new stock but again that's just my unsubstantiated guess!
Overpriced
Does Warren Buffet own any Amazon stock?
Not that I am aware, but he has publicly said he made a mistake not investing in Amazon and Google early on.
Dont look at PE ratios. It is good for brick and mortar companies. Name of the game is Revenue growth. Amzn is best as far as revenue growth among all faang. If revenue keeps growing, amzn will double in 4 years
Were you born yesterday? It has been always like this or much worse few years back!
Cloud is young and AWS is dominant. I can’t speak to stock prices, but Amazon’s future is extremely promising for no other reason than AWS. Plus the side projects like retail, ads and twitch offer some upside.
First of all, PEG is far less out of whack than you suggest - that's P/E to growth. You are paying not just for current earnings but for expected future earnings growth, based on demonstrated track record of execution, expansion and organic growth over time. Core business is strong with meaningful but not invincible competitive moats, rapidly growing cash flow cow businesses that are top in industry and chipping away at leaders respectively (AWS and Advertising) and big future bets in robotics and voice computing (Alexa) as well as being well positioned to monetize AI driven industry disruption. All of this spells more growth in the future. Best way to value Amazon is sum-of-parts approach, with DCF for mature businesses, multiple-driven approaches for midstage businesses and optionality-driven valuations for ads and Alexa.
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Amazon never had a great earnings until recently and even now it's so-so. They have a huge mestspace network to maintain that none of the others need and are in a low margin business to boot. Investors are putting confidence in Amazon's unparalleled ability to execute. Everyone else is years behind them.