Amazon stock overvalued
Just to give you some context, I worked in Amazon for 6 years and other tech companies for 4 years, follow tech closely and trade a lot.. I think people are confused about how to value Amazon retail.. aws , Alexa, etc.. are tech and valued on par with other but retail is over valued.. it is like a lending business.. margins are thin but revenues are high.. people are going by revenue. ex, one could lend 30 billion and get back 30.01 billion.. i.e 0.01 profit with 30 billion revenue.. if a tech company is has this revenue.. it's mind blowing ..like google n apple but Amazon retail.. nope.. they need to cut down 70 or so % from retail revenue to account goods cost to be on par with other tech companies while estimating value.. .
well said
P/E ratio is no longer a right metric to value your company. People have tons of money and they are betting on someone with great vision who can crush their competition. With the current interest rates, investors have nowhere to go.
Strong koolaid they servin over there!
I don't care about the ecommerce portion. I care about Aws, Alexa, amazon studios and amazon Go
Agreed amazon is a house of cards
The reason is Amazon's phenomenal growth. 10 years ago's price at today's earnings is actually a normal P/E. Because the speed of Amazon's bulldozing of retail is expected to be really high, people are willing to invest at insane P/Es. One day AMZN will run at 30 P/E, but it will likely be earnings catching up to the price rather than price catching down to earnings. But it will likely overshoot so it might be a little of both. I think people are betting on how much market cap they will have and how much patience they have to let it reach this. It's insane, but Amazon has steadily been attracting investors at ridiculous P/E and I feel it's deserved and not completely insane. That said I'm glad I sold off half my AMZN position (@1,039) and put it into gold on tuesday. Missed the intraday peak by two days. The markets are going to collapse badly very soon.
by investment in gold you mean any particular ETF?
IAU
Jeff's strategy is to reinvest and expand. You'll never see high pe.
Amazon doesn't trade on p/e. What is this novice finance bullshit finance talk. Take a few finance classes and a pe/vc class.
You've read one too few finance books?
That's 3 whole classes? Holy shit man. Well, then you should become CFO. 3 classes!
It definitely has a high valuation, but wall street understands that the retail portion is thin margined. They reward amazon with higher stock prices as high sales growth means they have more and more pipeline into consumers wallets. Prime is huge for them and growing leaps and bounds. Some analysts estimate primes yearly renewal rate is in the 90% range which is extremely healthy, and sets a solid base of recurring revenue. On top of that, AWS has a huge valuation, likely 200-300 billion. Imo the cloud does have huge growth potential, but it will also be an extremely competitive price area, and I see iaas basically turning into a price = marginal cost world. It'll be the more premium services that make any cloud provider money in the long run.
Basic finance 101 - companies give dividends when they don't have enough new initiatives to grow. our growth rate in these areas isn't shit compared to amazon. Amazon says, im gonna take every dollar I make and invest in new shit. Microsoft says for I want to give a part of it to my shareholders. That is enough of an indicator to the st that we aren't the same as amazon. They are grown. We are not.
Are you shorting?
Lol.. I don't think anyone in their right mind would short Amazon, FB, Google. (Apple has to prove themselves every year with the new iPhone so odds are better if you look historically).
Don't underestimate the power of mind. 😄