Submitted by MAC3113 t3_10p92oh in wallstreetbets
For a smooth brain operator, anyone want to explain why on planet earth Amazon is afforded such a shit-hot p/e ratio while the rest of big tech is trading at a conservative 20p/e? Is it because AWS is just that AMAZing? What am I missing here that the market apparently isn't? Doesn't AWS cover up a lot of their losses in other market domains?
Makes sense when you describe it as such. Still leaves lingering questions about how much of the failures in growth is compensated by the beast AWS is.
Most growth is fueled by aws however I wouldn’t call it failed growth just yet. Acquisitions such as mgm, one medical and irobot will take years to actually manifest itself and expanding their fulfillment network is never a bad choice (i mean just look at their buy with prime program they started, all due to their ever expanding network).
failed growth isn't the right way to describe it. The trade-off in between earnings now and projected growth, where projected growth's (ie their startups) losses are compensated by their current money printing machine, AWS.
100% correct. They’re leveraging the money printer that is AWS to invest in and buy other things. Some investments will take years to grow as stated.
IMO, they’re getting to be more similar to GE in the 90s, a position I maintain and others in these threads tend to staunchly disagree with. However, they’re seemingly in all consumer categories now (health, food, consumables, IT, entertainment, etc). Just ensures that the “growth” never ends.
Bezos is on the record as saying Amazon is getting too big and companies that too big tend to fail for one reason or another. At some point a Amazon CEO or then it’s will elect to sell of or divide the company as a means of streamlining the business. Just MO - don’t down vote me to much
Right, once they get too big, anti-trust could become a pertinent issue.
Not even anti trust, just the over dependence on AWS to pay for everything, eventually shareholders will get upset and demand a better performing stock and management might be stuck with little options but to break things up.
Remember when Tesla was trading for over 300 p/e and people were still piling in.. Pepperidge Farms remembers.
Simpler times those days.
AMZN trading less then 2 times sales which is historically cheap for them.
>It's because Amazon is a unique company that is growing at an incredible rate. They have a dominant market position in many of their businesses, and they continue to innovate and invest heavily in new areas (like AWS). Their high P/E ratio reflects this growth potential and investor confidence in the company.
I was going to say bad bot, but no, you belong here. If Amazon has a dominant market position in many areas of their business, how could there be enough room for growth to justify a P/E of 80? And AWS isn't a new area, it's been propping them up for years and they have like a third of the global market already. They're at the point where growth in most of their areas basically just put them at risk for antitrust lawsuits.
Exactly. AWS only has one way to go and that is down. Many companies are realizing that cloud is not all it is cracked up to be and moving back to onpremise. You can Colocate for 1/10th of what you pay for AWS and as soon as you reach a size where you are paying over $1k a month in AWS fees it is worth thinking about self-hosting and paying a few hours for maintenance from some IT company in your area. AWS would need to lower fees tremendously to be competitive or they will lose many of their bigger customers.
I feel that system lock in has been their saving grace for years, but as trends change, the rate of new customer acquisition will slow and therefore fewer people to fall into their trap. When people are only staying your customers to avoid the massive bill for moving their data out of your data center, that is not a recipe for success. It can literally cost 100s of thousands to transfer your data out, in addition to the costs of switching to a new system, so many companies want to avoid the large hit on a single quarterly report.
I have done the math and in some cases you are literally paying more in fees each month than it costs to buy the hardware outright. Remote hands from any decent hosting company costs under $150 an hour and I spend about 2 hours a month doing server maintenance for our servers. You can literally spend $5-7k upfront and buy your own server, colocate that for $100-200 in a datacenter instead of paying $2k to Amazon a month who also takes a huge payment upfront for the hardware. It doesn't take long until it makes sense to hire someone to take care of it in house and still save money over Amazon.
Literally what?? No enterprise or large corporation is realizing the cloud is not what it’s cracked up to be. Complete opposite. If you are still hosting on prem you’re literally ten years behind and asking for extended downtime or a host of other security vulnerabilities. The cloud has and will continue to be the enterprise standard for the future.
Lol, so misinformed
Dont use PE to make a decision. Use FCF. but then again 2022 was a shit year for AMZN’s cash flow. Its been negative for the last 2 years
I guess that means they're still growing?
Cool. Now do Tesla compared to other car companies.
Tesla has entered the Chat
Moat WIDE
Amazon has a spaceship. That's why.
Because Amazon keeps it’s earnings low by building it’s moat which its been doing for decades. Warehouses. Planes. Delivery network.
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I double dog dare you to buy puts
Apple has a P/E of 23 and MSFT’s is 27. That’s not “18-20”
Nvda 80+
And I would rather own Apple and MSFT.
I knew someone was going to say this.
P/E means nothing, Salesforce (CRM) is over 500 and stock is still rising.
treerter t1_j6j0a2q wrote
Amazon has always tried to minimize its earnings, while focussing on growth. Therefore the earnings are permanently low and the p/e is high.