Holy crap. That's enough to buy a controlling share of AT&T, almost all of Verizon, Sony 5 times over, Viacom 3 times over... It's hard to imagine how they could spend that on facilities or R&D, and AAPL's not the kind of company to take a loss on something in order to corner the market like AMZN. I can't imagine what they would spend it on.
Actually, speaking of Amazon, Apple could buy them easily, and still have enough money left over for Netflix.
Thisw is, of course, idle speculation, but it does serve to highlight just how much they could throw their weight around, if they wanted to.
Wow, I never made the connection but you are right. If AAPL really wanted to, they could buy AMZN in cash right now, even with their absurd valuation. Nuts.
I'd bet AMZN will hit a trillion $ market cap. You could buy it now and make roughly 3 times your investment in 10yrs or less. They (Bezos & team) are so so impressive.
They and Telsa in some ways are basically impossible to value.
So, people make difficult guesses.
Though I agree that because AMZN could probably simply 'turn on profit' at any time, and so the classical P/E is not a great measure ... at the same time ... a small dip in something could ruin them.
It only takes just a little bit of return to 'normal P/E' to wipe most of that out.
It's all emotion and intellectual pontification right now, and that's a crazy place to own a stock.
Their P/E is astronomical because their business model is based on buying market share. If you don't think that's a valid strategy, you don't invest in AMZN at all.
Would that it were true that you could simply compare tech companies by P/E to get a read on how "jazzed" the market is about a company, but Amazon and Apple are great illustrations of why you can't.
It's worth comparing to Apple who's stock price went backward when growth slowed (even though cash was piling up literally by the billions) AMZN could create profits but, unlike Apple, it wants to take every penny and reinvest it directly into new markets.
There reality of current equity valuations is such that, if sustained, there is some some pretty savage consolidation to come. The only limit is antitrust, or fear of.
$9bn is 0.5% of AMZN's current market cap, so $9bn represents a daily price fluctuation. They also have $45bn in cash reserves, so amazon could buy 5 MGMs without borrowing or issuing stock.
That's not even a lot! Apple, Google & FB have $200bn, $140bn & $65bn respectively. Dividends don't seem to be a thing, and it's basically impossible to invest this much cash internally. These companies don't have factories to build, or any kind of hard capital investments to make. Even an epic, blue sky cash sink like Waymo isn't capable of burning through their available capital, nevermind credit. Large capital investment at meaningful scale is not part these companies' culture, or competencies.
Acquisition is the only thing they can do, besides buying bitcoin and vanguard. Meanwhile, acquisitions bid up prices and exasperate the scenario further.
Morals and regulatory potential aside, does it not make sense for Tesla to buy and bury one or two major auto manufacturers? Ford is worth $50bn, GM is $80bn. Tesla is $600bn. Why bother competing?
^I'm purposely overstating, to make the provocative point... especially in regards to Tesla, who have no cash and other ways of doing capital investment anyway. Obviously, there is debt financing and other factors that complicate all of this.
>I think it might be fairer to look at AMZN's price to revenue ratio and compare that with other big companies which have margins AMZN might reasonably have when they start trying to make profits.
There is no indication that they will ever make huge profits. The Amazon you see is that Amazon you WILL see for the next 10-15 years at least.
I agree, but it seems to be a fundamentally different scenario than other companies with sky high P/Es such as LNKD and FB. While LNKD and FB have yet to figure out how to monetize their product, AMZN has a relatively simple (and demonstrated) growth plan. I think many investors are simply betting that Amazon will be able to capture significantly more of the retail market, and/or new revenue streams from places like cloud services.
Probably less than half of the $95m. AMZN opened at double its IPO price, and climbed up from there. The only way you could have gotten the IPO price is if you had a major account with Morgan-Stanley or the like and had a good relationship with them (i.e. you did a lot of trades so they got lots of commissions).
But yeah, there was still plenty of time for anyone to make a spectacular investment in Amazon.
I really like Amazon as a company, I know their products, market and believe AWS, Kindle are great growth areas. I really wanted to buy their stock but I dollar cost avg my existing positions instead. AMZN has gone from ~$40 when I was looking to over $60 today. nharman is a sad panda.
Highly doubtful. You don't even have to trust the word of their financial auditors to get convinced. Just knowing that AMZN's growth over the last 10+ years was entirely self-funded is clear evidence they have cash laying around to reinvest into the company.
I don’t know when I’ll ever get off the AMZN train, I bought stock for my portfolio a few years ago and it’s made me several times more money than what I’ve actually spent shopping on Amazon in the last 10 years! Even if I include AWS!
Actually, speaking of Amazon, Apple could buy them easily, and still have enough money left over for Netflix.
Thisw is, of course, idle speculation, but it does serve to highlight just how much they could throw their weight around, if they wanted to.
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