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> Amazons market cap is $475B. Assuming 10% ROI and 3% profit margin, Amazon must make $16 trillion in revenue some time in the future to justify the current pr
by MarkMc 9y ago
> Amazons market cap is $475B. Assuming 10% ROI and 3% profit margin, Amazon must make $16 trillion in revenue some time in the future to justify the current price.
3% of $16 trillion is $480 billion dollars. At a price-earnings multiple of say 10 the market cap would be $4.8 trillion. If $475 billion grows at 10% per year then it will take 24 years to grow to $4.8 trillion.
In 24 years total global retail sales might grow from $22 trillion to say $160 trillion. Is it so unreasonable to think that Amazon might have a 10% share of total retail sales in 24 years?
- ata6187 9y agoI agree that comment was poorly worded and confusing. I think what they might have meant was AMZN would have to earn $500B of profit over the next several years and based on 3% profit margin that would need $16T in revenue to earn that amount of profit. The math works out to approximately 7 years, though the comment just wrote "some time in the future".