4 ms·

They're not a Startup, they've been "going for growth" for a 1/4 of a century, eventually you need to make a profit to justify your Market Cap. Just because pro

by mythz 7y ago

They're not a Startup, they've been "going for growth" for a 1/4 of a century, eventually you need to make a profit to justify your Market Cap. Just because profit isn't a goal for AMZN doesn't mean it's not a vital financial metric.

brlewis 7y ago
You've presented a concise and valid set of statements that argue that a 100 P/E ratio might be expensive, but don't justify calling it insanely expensive.
djakjxnanjak 7y ago
Revenue is up 20% year over year. The growth is real, not just a goal.
- mythz 7y ago
  Only 20% is why the stock is down after hours, at 100 P/E AMZN is speculatively priced where they're expected to achieve infinite growth until they deliver financials that justify their valuation which Investors are betting on to happen before they hit any growth ceiling. There's also no room for an economy downturn which expensive stocks like AMZN are extremely volatile to.
  - eloff 7y ago
    Growing 20% at Amazon's size is why the stock is worth so much. Almost all companies have slowed down long before this point. Amazon is still growing like a late stage startup. It's really a remarkable feat.
    - mythz 7y ago
      Are Facebook, Google, Microsoft also still considered late stage Startups? FB Growth 28% YoY, P/E 26.51, Mkt Cap 573B GOOG Growth 19% YoY, P/E 25.90, Mkt Cap 788B MSFT Growth 12%, P/E 27.69, Mkt Cap 1.07T They all have a much more reasonable P/E. Agreed that it's harder to achieve growth from a massive base, but they're also priced from being able to continue doing so much better than their competitors.
      - eloff 7y ago
        It's pretty meaningless to look at P/E for tech companies and compare it to a retail company. But for those companies it's also pretty impressive, market beating growth.
        mythz 7y ago
        > It's pretty meaningless to look at P/E for tech companies and compare it to a retail company. Tech stocks usually have higher P/E's than retailers, but for comparison here are the P/E Ratios of the world's largest retailers: WMT 38.8 COST 34.33 KG 9.24 WBA 10.75 HD 21.73 TGT 15.39
        eloff 7y ago
        Yes, but now look at their growth as well and you'll understand Amazon's valuation is not wholly out of line.
        mythz 7y ago
        > Yes, but now look at their growth as well and you'll understand Amazon's valuation is not wholly out of line. Then please lay out your understanding of what justifies AMZN's price in your eyes as you've yet to quote a single figure. The only reason why WMT's P/E is so high (and their Market Cap doubled in since 2016) is because of their success in their e-commerce business which saw 37% growth YoY. You've been saying AMZN is a retail business whose financials can't be compared to Tech stocks which is clearly untrue, AMZN's retail business is less than 1/2 the size of Walmart yet they're worth 3x more who would've been worth even more if they didn't give out dividends which AMZN can't dream of doing at their current valuation.
        eloff 7y ago
        It's not untrue, Amazon is largely a retail business and you can't compare it's P/E to tech socks, that'd just be silly. You clearly know enough to know that, so I don't get why you insist. As for producing the numbers on the YoY for the retail companies you listed - I hope somebody else does that. I'm busy.
nicoburns 7y ago
I don't understand why companies don't just let there stock price fall. This makes no material difference to the operating of the company, right?
- changoplatanero 7y ago
  Rising stock price is helpful for retaining high value employees that are compensated with stock
  - nicoburns 7y ago
    I guess. You could just pay them more though.
    - allthecybers 7y ago
      > I guess. You could just pay them more though. This is a good idea. Stop the stock game and just pay a set base salary = to comp + stock. But we can’t do that because that would take all the fun out of seeing part of your potential income fluctuate with the whims and buffoonery of Wall Street.
  - deleted 7y ago
    [deleted]
- mythz 7y ago
  Shareholders own companies and a rising stock price benefits shareholders who elect the board members that run said company, a falling stock price isn't in anyone's interest who are invested in the company. It does help with M&A, raising capital, employee stock options + bonuses. It's rare, but sometimes you'll hear company Investors saying that their stock price is too high, like Zoom's CEO [1]. [1] https://www.bloomberg.com/news/articles/2019-04-18/zoom-video-soars-to-16-billion-valuation-in-u-s-trading-debut https://www.bloomberg.com/news/articles/2019-04-18/zoom-vide...
  - nicoburns 7y ago

by mythz 7y ago

brlewis 7y ago

You've presented a concise and valid set of statements that argue that a 100 P/E ratio might be expensive, but don't justify calling it insanely expensive.

djakjxnanjak 7y ago

Revenue is up 20% year over year. The growth is real, not just a goal.

mythz 7y ago
Only 20% is why the stock is down after hours, at 100 P/E AMZN is speculatively priced where they're expected to achieve infinite growth until they deliver financials that justify their valuation which Investors are betting on to happen before they hit any growth ceiling. There's also no room for an economy downturn which expensive stocks like AMZN are extremely volatile to.
- eloff 7y ago
  Growing 20% at Amazon's size is why the stock is worth so much. Almost all companies have slowed down long before this point. Amazon is still growing like a late stage startup. It's really a remarkable feat.
  - mythz 7y ago
    Are Facebook, Google, Microsoft also still considered late stage Startups? FB Growth 28% YoY, P/E 26.51, Mkt Cap 573B GOOG Growth 19% YoY, P/E 25.90, Mkt Cap 788B MSFT Growth 12%, P/E 27.69, Mkt Cap 1.07T They all have a much more reasonable P/E. Agreed that it's harder to achieve growth from a massive base, but they're also priced from being able to continue doing so much better than their competitors.
    - eloff 7y ago
      It's pretty meaningless to look at P/E for tech companies and compare it to a retail company. But for those companies it's also pretty impressive, market beating growth.
      - mythz 7y ago
        > It's pretty meaningless to look at P/E for tech companies and compare it to a retail company. Tech stocks usually have higher P/E's than retailers, but for comparison here are the P/E Ratios of the world's largest retailers: WMT 38.8 COST 34.33 KG 9.24 WBA 10.75 HD 21.73 TGT 15.39
        eloff 7y ago
        Yes, but now look at their growth as well and you'll understand Amazon's valuation is not wholly out of line.
        mythz 7y ago
        > Yes, but now look at their growth as well and you'll understand Amazon's valuation is not wholly out of line. Then please lay out your understanding of what justifies AMZN's price in your eyes as you've yet to quote a single figure. The only reason why WMT's P/E is so high (and their Market Cap doubled in since 2016) is because of their success in their e-commerce business which saw 37% growth YoY. You've been saying AMZN is a retail business whose financials can't be compared to Tech stocks which is clearly untrue, AMZN's retail business is less than 1/2 the size of Walmart yet they're worth 3x more who would've been worth even more if they didn't give out dividends which AMZN can't dream of doing at their current valuation.
        eloff 7y ago
        It's not untrue, Amazon is largely a retail business and you can't compare it's P/E to tech socks, that'd just be silly. You clearly know enough to know that, so I don't get why you insist. As for producing the numbers on the YoY for the retail companies you listed - I hope somebody else does that. I'm busy.

nicoburns 7y ago

I don't understand why companies don't just let there stock price fall. This makes no material difference to the operating of the company, right?

changoplatanero 7y ago
Rising stock price is helpful for retaining high value employees that are compensated with stock
- nicoburns 7y ago
  I guess. You could just pay them more though.
  - allthecybers 7y ago
    > I guess. You could just pay them more though. This is a good idea. Stop the stock game and just pay a set base salary = to comp + stock. But we can’t do that because that would take all the fun out of seeing part of your potential income fluctuate with the whims and buffoonery of Wall Street.
- deleted 7y ago
  [deleted]
mythz 7y ago
Shareholders own companies and a rising stock price benefits shareholders who elect the board members that run said company, a falling stock price isn't in anyone's interest who are invested in the company. It does help with M&A, raising capital, employee stock options + bonuses. It's rare, but sometimes you'll hear company Investors saying that their stock price is too high, like Zoom's CEO [1]. [1] https://www.bloomberg.com/news/articles/2019-04-18/zoom-video-soars-to-16-billion-valuation-in-u-s-trading-debut https://www.bloomberg.com/news/articles/2019-04-18/zoom-vide...
- nicoburns 7y ago