With its price-to-earnings multiple in the stratosphere, Amazon often comes up in conversation as being "overpriced." While this conclusion may be true, it's no

With its price-to-earnings multiple in the stratosphere, Amazon often comes up in conversation as being "overpriced." While this conclusion may be true, it's not because Amazon is unprofitable... Publicly traded companies optimize for return-on-invested-capital (ROIC), which includes profits (dividends) plus increases in equity value (share price). Stable companies in stable markets often make the greatest returns by increasing revenue and reducing costs (i.e., optimizing for earnings). Companies in high-growth markets (esp. competitive ones) typically optimize for long-term market share/growth (which manifests as increases in equity value). Amazon falls into the latter category. Not sure this makes sense to/helps anyone, but yeah, that's why Amazon operates the way it does.