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> They are in ever expanding price cutting small margin business. If you sink all of your profits into expansion, then on the books you made zero profit. If y
by snarfy 9y ago
> They are in ever expanding price cutting small margin business.
If you sink all of your profits into expansion, then on the books you made zero profit. If you made zero profit, you pay zero taxes. This is a common tactic with farmers. They use this year's returns to buy next year's supplies. If amazon stopped growing and suddenly reaped their profits, there would be a big tax bill to go with it.
- sidlls 9y agoThere's a middle ground: don't grow as much, and pay some taxes. Not saying it's optimal (for any party, or on any axis), but it's not like there's just this binary choice of "growth consumes all profit" and "don't grow at all."
- gozur88 9y agoAt some point that will happen. Companies can't experience exponential growth indefinitely.
- samfisher83 9y agoThis isn't how accounting works. You can't just buy a warehouse and expense it in year one. You have to depreciate it overtime. You can look at their FCF its about 10 billion. Their market is 50x of that. For comparison walmart is ~20 billion and they are worth half of Amazon.