5 ms·

Facebook makes more profit than Amazon. Why is it weird for it to have a higher market cap?

• bri3d 14y ago
  P/E is about predicted growth. There's little reason to invest in non-dividend stocks unless you expect the company to grow in value, so predicted growth is a much better metric than current profit. As your post's parent points out, Amazon have depressed earnings due to a heavy investment in expansion. Plus, Amazon's growth strategy (go international and sell more digital goods) is both obvious and working well for them (based on YoY revenue). Facebook have already-declining revenue and only speculative growth strategies, as they have peaked out the "obtaining users and selling impressions" strategy and they haven't proven that they have a method for converting mobile users to revenue.
• InclinedPlane 14y ago
  Profit is highly variable for a tech company. I pointed out the reasons why Amazon's profits are comparatively low at this moment and why their growth potential is strong. It's weird for facebook to have a market cap which represents 2,800% of their total annual revenue, compared to 5x and 2x annual revenue for Apple and Amazon.