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50+ years in future - Amazon is still optimising some part of their ecommerce infrastructure / entering a new market. Jokes aside, it will be incredibly interes

50+ years in future - Amazon is still optimising some part of their ecommerce infrastructure / entering a new market. Jokes aside, it will be incredibly interesting how Amazon's strategy to discard profits and just scale everywhere will work out. Will they become insanely profitable as everyone expects?

tunesmith 11y ago
I thought they actually are profitable due to earning interest on the difference between accounts receivable (quick) and accounts payable (slow).
- tajen 11y ago
  shubhamjaim is probably referencing their stock exchange strategy, where they never give dividends and reinvest all benefits. In theory it makes the stock price rise, but one day the trust that Amazon can ever produce dividends will be ballotted (especially if Amazon meets severe hurdles) and the stock price may collpase, ruining all stock holders. So is it a giant Ponzi scheme? Even Apple gave dividends, from 87-95 and 2012-now.
  - deleted 11y ago
    [deleted]
  - melvinmt 11y ago
    Amazon (intentionally) does not make profits to begin with [1], so there's no dividend to give. [1] https://d28wbuch0jlv7v.cloudfront.net/images/infografik/normal/ChartOfTheDay_1126_Amazons_Aggressive_Growth_Strategy_n.jpg https://d28wbuch0jlv7v.cloudfront.net/images/infografik/norm...
  - johnchristopher 11y ago
    So they basically practice dump on a massive scale to reap the benefits later when every other actors is dead.
  - MichaelBurge 11y ago
    The stock price doesn't necessarily reflect the eventual issuance of dividends. A company that put in its articles of organization "We forbid ourselves from ever issuing even the slightest dividend" I would expect to have a perfectly normal(nearly matching its dividend-allowing equivalent) stock price on the market, and wouldn't consider this abnormal or irrational on the part of the shareholders.
    - djhn 11y ago
      This almost makes it an entirely different kind of investment vehicle, one where the underlying value is more similar to bitcoin or gold - commodities commonly traded and used as a store of money - with the difference that investors do retain proportional ownership of the company's capital assets, ip, etc. which convert to cash in the (inevitable?) case of the company shutting down or getting acquired.
  - mseebach 11y ago
    There's nothing wrong with growing instead of paying dividends. Growth: We have 100 outstanding shares of $1, so we're worth $100, we made a "profit" of $5 which we immediately invest in ourselves such that we're now worth $105. Each shareholder is $0.05 better off. Dividends: We have 100 outstanding shares of $1, so we're worth $100, we made a profit (no quotes) of $5 which we pay out in dividends. Each shareholder is $0.05 better off. We also issue five new shares of $1 and invest the revenue in growth, the company is now worth $105. The former model gives Amazon more freedom by isolating them from the whims of stock market (it's hard/expensive to raise money in a down market), and is probably more efficient because there are fewer transactions involved, but requires investment opportunities for the $5. Apple, famously, does not have these opportunities, so the best they can do (indeed, what they're supposed to do -- if investors want to invest in cash, they'll go to the treasury bond market) is to remit the cash to shareholders, through dividends and buy backs.
vonklaus 11y ago
I would imagine that tgey realized it would be easier to do autopilot on a container ship than drones. They already have pilot boats, where a licensed captain navigates from a staging area off shore into the port of call. Actually a reasonably standard thing in shipping. They are now the level 3/cogent + verizon + netflix of commerce. I dont even think walmart had this level of rollup.
- TorKlingberg 11y ago
  Amazon do have their own ships, they are reselling shipping services.
  - PakG1 11y ago
    So they're doing the shipping version of AWS?
    - darkr 11y ago
      Amazon Wet Services?
  - kyllo 11y ago
    They do not have their own ships. They have become a licensed intermediary, it means they can resell capacity on ocean container ships.

tunesmith 11y ago

I thought they actually are profitable due to earning interest on the difference between accounts receivable (quick) and accounts payable (slow).

tajen 11y ago
shubhamjaim is probably referencing their stock exchange strategy, where they never give dividends and reinvest all benefits. In theory it makes the stock price rise, but one day the trust that Amazon can ever produce dividends will be ballotted (especially if Amazon meets severe hurdles) and the stock price may collpase, ruining all stock holders. So is it a giant Ponzi scheme? Even Apple gave dividends, from 87-95 and 2012-now.
- deleted 11y ago
  [deleted]
- melvinmt 11y ago
  Amazon (intentionally) does not make profits to begin with [1], so there's no dividend to give. [1] https://d28wbuch0jlv7v.cloudfront.net/images/infografik/normal/ChartOfTheDay_1126_Amazons_Aggressive_Growth_Strategy_n.jpg https://d28wbuch0jlv7v.cloudfront.net/images/infografik/norm...
- johnchristopher 11y ago
  So they basically practice dump on a massive scale to reap the benefits later when every other actors is dead.
- MichaelBurge 11y ago
  The stock price doesn't necessarily reflect the eventual issuance of dividends. A company that put in its articles of organization "We forbid ourselves from ever issuing even the slightest dividend" I would expect to have a perfectly normal(nearly matching its dividend-allowing equivalent) stock price on the market, and wouldn't consider this abnormal or irrational on the part of the shareholders.
  - djhn 11y ago
    This almost makes it an entirely different kind of investment vehicle, one where the underlying value is more similar to bitcoin or gold - commodities commonly traded and used as a store of money - with the difference that investors do retain proportional ownership of the company's capital assets, ip, etc. which convert to cash in the (inevitable?) case of the company shutting down or getting acquired.
- mseebach 11y ago
  There's nothing wrong with growing instead of paying dividends. Growth: We have 100 outstanding shares of $1, so we're worth $100, we made a "profit" of $5 which we immediately invest in ourselves such that we're now worth $105. Each shareholder is $0.05 better off. Dividends: We have 100 outstanding shares of $1, so we're worth $100, we made a profit (no quotes) of $5 which we pay out in dividends. Each shareholder is $0.05 better off. We also issue five new shares of $1 and invest the revenue in growth, the company is now worth $105. The former model gives Amazon more freedom by isolating them from the whims of stock market (it's hard/expensive to raise money in a down market), and is probably more efficient because there are fewer transactions involved, but requires investment opportunities for the $5. Apple, famously, does not have these opportunities, so the best they can do (indeed, what they're supposed to do -- if investors want to invest in cash, they'll go to the treasury bond market) is to remit the cash to shareholders, through dividends and buy backs.

vonklaus 11y ago

I would imagine that tgey realized it would be easier to do autopilot on a container ship than drones. They already have pilot boats, where a licensed captain navigates from a staging area off shore into the port of call. Actually a reasonably standard thing in shipping. They are now the level 3/cogent + verizon + netflix of commerce. I dont even think walmart had this level of rollup.

TorKlingberg 11y ago
Amazon do have their own ships, they are reselling shipping services.
- PakG1 11y ago
  So they're doing the shipping version of AWS?
  - darkr 11y ago
    Amazon Wet Services?
- kyllo 11y ago
  They do not have their own ships. They have become a licensed intermediary, it means they can resell capacity on ocean container ships.