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PE has little to nothing to do with Amazon's stock price. They have, as they have shown, complete ability to dictate the size of their earnings based on how muc
by mrkstu 9y ago
PE has little to nothing to do with Amazon's stock price. They have, as they have shown, complete ability to dictate the size of their earnings based on how much they want to spend on new research and infrastructure.
Amazon could milk its existing assets for a huge return and provide sky high earnings- instead it is doing what it has done to this point, build dominating positions in multiple new markets. Bezos has been brilliant in leveraging his cash generating businesses into growing revenue. There is 0 reason to stop at this juncture to artificially prop up the PE ratio.
- spott 9y ago> They have, as they have shown, complete ability to dictate the size of their earnings based on how much they want to spend on new research and infrastructure. I think you are thinking of profit, not earnings. Earnings is revenue - cost of production, which has nothing to do with R&D or infrastructure development.
- mrkstu 9y agoR&D and infrastructure are still expenses and lower your earnings- it is still cash going out that you can't return to shareholders.
- sib 9y agoEarnings == profit. You may be thinking of gross margin. "Earnings are the amount of profit that a company produces during a specific period, which is usually defined as a quarter (three calendar months) or a year."
- spott 9y ago>https://money.stackexchange.com/questions/22795/is-there-a-difference-between-a-companys-profit-vs-earnings https://money.stackexchange.com/questions/22795/is-there-a-d... This has a different answer than Investopedia. The difference is subtle, but it is there.