I thought someone was bringing up a 5 year old post to mention how wrong it was, then was surprised to see someone spouting this stuff today. I remember hearing this line of reasoning a lot in the early 2000s, and Amazon has only become substantially bigger and more dominant since then. You'd think all the naysayers from then would be hiding under a rock by now, but I guess new ones pop up all the time.
Is Amazon a Fad?
- Thread starter HeSaidSheSaid
- Start date
Loving the product doesn't mean you have to love the fundamentals of the company, be it TSLA, NFLX or AMZN. Also, fundamentals have nothing to do with the stock prices of those mentioned stocks.
Did you know AMZN is losing on average 6 Billion bucks annually on delivery? yeah, that 2 hours or same day deliveries come with a price. Their only real money maker is cloud computing what has NOTHING to do with delivering of physical products to the customer's house....
https://seekingalpha.com/article/4066957-amazon-basically-dumping
I agree with the opinion of this guy:
"AWS is the only thing giving any profit to Amazon, yet it is facing intense pricing pressure, hence the poor profit guidance from Amazon.
As to the retail side: it is astonishing that in 20 years, Amazon has yet to turn a meaningful profit. I don't think they can at this point; Americans are heavily in debt and price is everything. Amazon's margins are already cut to the bone, so they have nowhere to go.
Amazon trades purely on the prospect of growth. As long as Bezos can keep finding markets to enter to sustain strong growth, the shares will hold up. But if growth falls below 20%, the illusion will shatter. Whilst revenue growth is still 22.5%, it is falling in every segment. Amazon are guiding 20% growth at the midpoint. That strikes me as the minimum growth needed to sustain the share bubble."
I can find articles from 2001, and 2003, and 2004, and 2007, and 2008.... that say almost verbatim what you just said. At some point you have to throw in the towel and come to the conclusion that a company that has been defying these constant naysayers since 1995 may have something the naysayers are overlooking (I was one such naysayer!). One of those things is the fact that AWS is essentially something that Amazon has to build, maintain, and improve as part of their underlying business. Being able to sell this at essentially 0 marginal cost is a huge competitive advantage that none of their competitors share.
You mean in the year when the stock went under $6, a 2/3rd drop from each IPO price. (IIRC it dropped that much in the same year) Apparently investors love a growth story, and as long as the growth continues and there are more money chasing less opportunities, the stock won't collapse.
Anyhow, I agree with Ballmer (you know, of MSFT fame) from 2014:
Golden nugget: "I am proud of the fact, that we made 250 billion bucks as PROFIT, under my watch as CEO....."
Since the vast majority of their contemporaries went to $0 that's actually an accomplishment. Webvan anyone? I know Ballmer well, he actually dropped out of my grad school to co-found MSFT so he's a bit of a legend there. That said, he inherited a monopoly, granted a monopoly that he and Bill Gates skillfully built, in the software space, so it's not really an apples to apples comparison. AWS actually kicked Azure's behind that year in profitability (and usability), the only area they were in head to head competition.
Ballmer was an egghead who had no vision.
Also the Amazon IPO price is $1.5 in todays stock, so it never fell below the IPO price in 2001. Although it still fell 95% from its bubble high.
Amazon's plan for expanding their business: selling marijuana on their website. it's legal in Washington state. fetish people tend to love faddish stocks. as far as faddish stocks are concerned, perception doesn't make reality. it's big money that makes reality until Amazon fails to mine the moon for gold.
Amazon is unstoppable, they're so innovative. No one can compete with Amazon right now.