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That should not matter at all to a shareholder.

FredPret 5y ago
No, if a biz can’t profitably reinvest excess cash, it should get returned to investors as buybacks or dividends. No investment opportunity can take unlimited capital input
- astrange 5y ago
  Note that Amazon.com has not proven it can profitably reinvest - just that it can reinvest and keep growing revenue. The question is why so many people believe Bezos when he said there was a plan to eventually become profitable. (AWS is quite profitable, but retail isn't, and it doesn't have a moat.)
  - ikRwS3Nb6Y 5y ago
    No, you are wrong about this. Or several years out of date at least. The idea that Amazon isn't profitable save for AWS is almost a meme for some reason in parts of the tech community, but it isn't true and never really has been when you account for re-investment. Retail on its own has been profitable for several years now, and its margins are improving. Some of those numbers are public and some are not, but even with just the public numbers it is easy enough to infer the above. What's more, Amazon retail would be pretty wildly profitable, relative to the typical margins of retail, if Amazon stopped dumping billions of dollars every quarter into continuous expansion of its logistics capabilities. They're able to dump those billions while still pulling a slight profit. In general though, they optimize for free cash flow, not profit. Source: worked there until recently
    - astrange 5y ago
      This was more about when Amazon was starting up (eg before Prime or slightly after it) than the last few years. Nobody expects it to die at this point. Also I said "quite profitable" not "profitable" ;) > What's more, Amazon retail would be pretty wildly profitable, relative to the typical margins of retail, if Amazon stopped dumping billions of dollars every quarter into continuous expansion of its logistics capabilities. Well, this is falsifiable, but it hasn't been tested, so I dunno.
cartoonworld 5y ago
I strongly disagree with this statement. Stock pump is great when you plan to sell later, realize dizzying share price gains, enjoy stock splits, and take loans against your portfolio; that's how it works now and I get it. But something glaring about this situation makes me feel rather uneasy. Since the market has transitioned from dividends to price hikes, the price performance is fully baked into the economic equations that investors count on for profits. I can't help but feel something is untoward about the ponzi-esque mechanics and tax sheltering implications of buy-hold-sell-buy the dip-hold. Regular (not rich) people are much less insulated to market downturns and the big players as well as corporate officers are bound to value short term performance, stock buybacks in lieu of dividends, pr-driven policies, and doesn't this even further incentivize insider trading activities and concealment of environmental issues, HR abuses, and other externalities? What is the real point of the stock now? It is so much farther divorced from the fundamentals of a business and tilted towards this emotional stock market yearly performance corporate raider stuff. Doesn't the stock market have to keep recording historic record highs, or else this all comes crashing down? Does it really matter at all what a company is doing so long as the share price climbs at a rate above inflation? Shouldn't the smartest move now be to buy mass market ad campaigns for "Buy AMZN!"? I mean, if you squint at it just right it looks like if that works, corporations would be obligated to do just that. If its all truly this fake (so to speak) and its gonna be fine, aren't I an enormous idiot for not quitting my job, liquidating everything, and just buying and selling shares all day long? (I suspect the answer is yes.)
brtkdotse 5y ago
As a sibling comment posted, if no one cares about dividends there’s no endgame with owning a stock making it effectively a “always a greater fool” con.

No, if a biz can’t profitably reinvest excess cash, it should get returned to investors as buybacks or dividends. No investment opportunity can take unlimited capital input

astrange 5y ago
Note that Amazon.com has not proven it can profitably reinvest - just that it can reinvest and keep growing revenue. The question is why so many people believe Bezos when he said there was a plan to eventually become profitable. (AWS is quite profitable, but retail isn't, and it doesn't have a moat.)
- ikRwS3Nb6Y 5y ago
  No, you are wrong about this. Or several years out of date at least. The idea that Amazon isn't profitable save for AWS is almost a meme for some reason in parts of the tech community, but it isn't true and never really has been when you account for re-investment. Retail on its own has been profitable for several years now, and its margins are improving. Some of those numbers are public and some are not, but even with just the public numbers it is easy enough to infer the above. What's more, Amazon retail would be pretty wildly profitable, relative to the typical margins of retail, if Amazon stopped dumping billions of dollars every quarter into continuous expansion of its logistics capabilities. They're able to dump those billions while still pulling a slight profit. In general though, they optimize for free cash flow, not profit. Source: worked there until recently
  - astrange 5y ago
    This was more about when Amazon was starting up (eg before Prime or slightly after it) than the last few years. Nobody expects it to die at this point. Also I said "quite profitable" not "profitable" ;) > What's more, Amazon retail would be pretty wildly profitable, relative to the typical margins of retail, if Amazon stopped dumping billions of dollars every quarter into continuous expansion of its logistics capabilities. Well, this is falsifiable, but it hasn't been tested, so I dunno.

cartoonworld 5y ago

I strongly disagree with this statement. Stock pump is great when you plan to sell later, realize dizzying share price gains, enjoy stock splits, and take loans against your portfolio; that's how it works now and I get it. But something glaring about this situation makes me feel rather uneasy. Since the market has transitioned from dividends to price hikes, the price performance is fully baked into the economic equations that investors count on for profits. I can't help but feel something is untoward about the ponzi-esque mechanics and tax sheltering implications of buy-hold-sell-buy the dip-hold. Regular (not rich) people are much less insulated to market downturns and the big players as well as corporate officers are bound to value short term performance, stock buybacks in lieu of dividends, pr-driven policies, and doesn't this even further incentivize insider trading activities and concealment of environmental issues, HR abuses, and other externalities? What is the real point of the stock now? It is so much farther divorced from the fundamentals of a business and tilted towards this emotional stock market yearly performance corporate raider stuff. Doesn't the stock market have to keep recording historic record highs, or else this all comes crashing down? Does it really matter at all what a company is doing so long as the share price climbs at a rate above inflation? Shouldn't the smartest move now be to buy mass market ad campaigns for "Buy AMZN!"? I mean, if you squint at it just right it looks like if that works, corporations would be obligated to do just that. If its all truly this fake (so to speak) and its gonna be fine, aren't I an enormous idiot for not quitting my job, liquidating everything, and just buying and selling shares all day long? (I suspect the answer is yes.)

brtkdotse 5y ago

As a sibling comment posted, if no one cares about dividends there’s no endgame with owning a stock making it effectively a “always a greater fool” con.