Shabba

Amazon-Sized Craziness

I think the stock is more a reflection of cheap money than the actual fundamentals of the company. I'm short the stock, so I am kind of biased. But this just gets absolutely more and more ridiculous as time goes on.

I like the company, it's a great story and they'll do well but the stock is just totally ridiculous. You have to keep things in perspective by remembering that they earned .45 a share last quarter and that was .15 more than the same quarter last year. And on than news the stock has gone up $45.00 a share on the earnings announcement and the ridiculous pump and dump upgrades that followed.

Valuing Amazon Like the Next Wal-Mart

Should also say that I am short the stock now. I just don't see the earnings growth or the economic environment to value a stock so highly.

Valuing Amazon Like the Next Wal-Mart

Interesting analysis. I've never valued a stock like this before. Are you saying that it is undervalued because the results of your analysis give an IRR of 17 or 13.9 and the market discount rate is 12, meaning that the company returns higher than the market and is therefore undervalued?

It seems like with long projection models you can argue any valuation though. It seems unlikely that growth rates will be high for economic reasons and the fact that Amazon is mature and so is the internet. But it is possible I guess.

It does seem strange to me that other similar high-tech internet based companies that have similar earnings growth (apple or google for example) aren't valued nearly as richly. I guess everything isn't logical.

Stocks to Watch as Market Leadership Changes Hands

I don't understand how investors can justify a PE of over 70 on Amazon. The company is over 10 years old and earnings seem to be growing by about 20%. Some of the other higher fliers like google and apple have PEs roughly half of Amazon. The valuation just seems absolutely ridiculous, even in a great economic climate (which of course we don't have). I am curious if there is some explanation here for the valuation, I really don't know.