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Nicholas Parks

Nicholas Parks
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  • Should You Wait 200 Years For A Return On Amazon? [View instapost]
    Update.

    Wow, that doesn't seem so long ago. Fortunately for AMZN investors, it's up 20% or so in the period since I wrote this. The average analyst thinks AMZN will end the year with profits of 87 cents per share, or about $400m. That values AMZN at 352 years of earnings. I know this is ridiculous and unfair of me to point out. For over ten years we've been hearing how AMZN's model is about user growth and that they can monetize those millions of users at a moment's notice. This is Bezos' master plan, huh? For arguments sake, how much would AMZN to make for the current valuation to be fair? First, we have to define "fair valuation." I believe the market is currently valued around 16 times earnings. AMZN has historically grown revenues significantly faster than the average Dow Jones stock and will probably continue to do so. Thus, it is probably worthy of a valuation two to three times the market average - something roughly in the 30 to 45 earnings range. To justify the current valuation of $141 billion, AMZN would have to net between $4.7 billion and $3.1 billion, respectively. While this is theoretically possible, it is important to note that AMZN combined earnings for the past five years is $3.3 billion. Notably, since 1996, AMZN has lost something between $15 billion and $16 billion. Thus, we basically have to assume that AMZN is capable of producing one year of profits equal to or in excess of the combination of all of its profitable years. That seems like a dramatic stretch of the imagination.
    Oct 8 01:10 AM | Likes Like |Link to Comment
  • US Airways Continues To Fly Higher [View article]
    If there is merger premium priced in, I'm not sure what logic was used. I agree that LCC offers a very low P/E which is justification enough own it. The merger will severely dilute our shares (I own call options), but LCC appears to be well run at the moment and the additional routes available post-merger would be beneficial. With that said, I would be just as content to see the merger fail. I like owning a well run company that has a low P/E. The heavy dilution will likely more than offset any near-term benefits of a merger.
    Jan 26 01:41 AM | Likes Like |Link to Comment
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