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People are coming to realize that billions in revenue means nothing without any kind of margin. And Amazon will never have high margins on retail. Their stock

People are coming to realize that billions in revenue means nothing without any kind of margin. And Amazon will never have high margins on retail. Their stock has coasted for decades on the belief that they would one day be able to monetize their e-commerce revenue. Well here we are with over 100B in revenue. Where is the profit? There’s a dotcom level come to Jesus moment with the entire tech sector right now. The stories driving many of these stocks were nothing more than fairytales in the end Cloud will have better margins, but the e-commerce business has been grossly overvalued for a long time. It doesn’t mean they can’t be successful, but they will have more realistic valuations going forward, with much less excess

bushbaba 4y ago
> they would one day be able to monetize their e-commerce revenue. They make more on Amazon Ads than Alphabet makes on Youtube. So yes it looks like it's monetized. Even retail has profit. It's just being spent on other growth areas (Alexa, Games, Prime Air, Healthcare etc)
- adam_arthur 4y ago
  No, Amazon had negative margins this and was not profitable this quarter ex AWS I recommend investing on real data, not what you may imagine up the company is doing
lotsofpulp 4y ago
> People are coming to realize that billions in revenue means nothing without any kind of margin. This is not a new realization. A business without margin is called a charity. Everyone from the immigrant family that did not go to college and operates a laundromat to Harvard Business School graduates know this.
- adam_arthur 4y ago
  It's new in the sense that valuations are now compressing on this basis, whereas before, the majority didn't care and we had 50x, 100x sales valued companies
  - deleted 4y ago
    [deleted]
  - lotsofpulp 4y ago
    I think the more accurate statement would be: People are coming to realize that billions in revenue without any kind of margin may not materialize in these business eventually becoming sufficiently profitable, And/or They may not be able to find a bigger fool to buy from them at a high price. Surely all these smart investors already knew retail businesses only earn sub 5% profit margins. They were/are betting on Amazon’s infrastructure as a service, platform as a service, and web services to deliver fat profit margins.

bushbaba 4y ago

> they would one day be able to monetize their e-commerce revenue. They make more on Amazon Ads than Alphabet makes on Youtube. So yes it looks like it's monetized. Even retail has profit. It's just being spent on other growth areas (Alexa, Games, Prime Air, Healthcare etc)

adam_arthur 4y ago
No, Amazon had negative margins this and was not profitable this quarter ex AWS I recommend investing on real data, not what you may imagine up the company is doing

lotsofpulp 4y ago

> People are coming to realize that billions in revenue means nothing without any kind of margin. This is not a new realization. A business without margin is called a charity. Everyone from the immigrant family that did not go to college and operates a laundromat to Harvard Business School graduates know this.

adam_arthur 4y ago
It's new in the sense that valuations are now compressing on this basis, whereas before, the majority didn't care and we had 50x, 100x sales valued companies
- deleted 4y ago
  [deleted]
- lotsofpulp 4y ago
  I think the more accurate statement would be: People are coming to realize that billions in revenue without any kind of margin may not materialize in these business eventually becoming sufficiently profitable, And/or They may not be able to find a bigger fool to buy from them at a high price. Surely all these smart investors already knew retail businesses only earn sub 5% profit margins. They were/are betting on Amazon’s infrastructure as a service, platform as a service, and web services to deliver fat profit margins.