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I'd love to see an analysis of the risk embedded in the future profits that everyone talks about. What these analyses completely ignore is that Amazon's future

I'd love to see an analysis of the risk embedded in the future profits that everyone talks about. What these analyses completely ignore is that Amazon's future cash flows are risky, while the current cashflows at the dying business are not. There are countless examples of giant companies that haven't realized the enormous future cashflows embedded in their stock prices. It is obvious that Amazon generates lots and lots of revenue, no one disagrees with that. What remains an open question is will they be able to ease off of massive infrastructure investment and actually harness the future profitability that everyone seems certain of at this point. These straw man arguments that profit-less companies have huge market caps so they will turn hugely profitable ignores the actual argument of whether they can actually achieve that. Can profit does not equal will profit.

tbarbugli 13y ago
amen
gfodor 13y ago
Yup. It really boils down to human nature. Which is sexier, a stock whose cash flows and business are well understood, or a stock like Amazon whose "potential" could possibly take over the world? It's hard to let your imagination run wild about the potential upside of an investment in a boring blue chip that is in the business of making regular profits, but whose margins, market, competition, and overall arc of the business are well established. But in an environment where the stock market is at an all time high, people are ready to believe that Amazon is just a few knobs being turned away from world domination.