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Sure, but the question is then why AMZN earnings justify 250 times the prices of APPL earnings, or GOOG earning justify twice the price. Also, growth of growth
by fleitz 14y ago
Sure, but the question is then why AMZN earnings justify 250 times the prices of APPL earnings, or GOOG earning justify twice the price.
Also, growth of growth is flat, not actual growth which is still quite positive.
Last year they made $25 billion, this year they made $41. But of course the rate of growth is smaller than the year before last when they only made $14 billion. This according to Wall St means they are failures.
Lets put it this way, APPL's earnings growth is twice GOOG's total earnings.
- chucknelson 14y agoI would love for someone to explain how Amazon's P/E is justified. It seems like insanity when you see how Amazon's core business model does not revolve around profits (or so it seems).
- tedunangst 14y agoAmazon's business model revolves around future profits. The stock price reflects that. P/E isn't a particularly useful indicator of anything.
- chucknelson 14y agoFuture profits that are coming...when? Considering their margins seem to always be razor thin, I'm not sure what investors are expecting.
- jarek 14y ago> This according to Wall St means they are failures. No, it doesn't. (edit: they are failures when it comes to keeping up their growth rate, yes.) But if previous stock price was arrived at by assuming rate of growth would stay constant, the stock will drop if rate of growth drops, as according to best available prediction the company will be worth less in the future than you had previously expected. Stock prices are influenced by all kinds of predictions, guesses, and voodoo for present and future. It's a good idea to not to attach too many personal feelings or judgments like "winner," "best," or "failure" to the stock for this reason.