Bezos is a former Wall Street exec. He knows
how to spin the situation for the funds to bite.
The share price is a reflection of the grandeur regarding how well AMZN will be able to further penetrate the retail arena, which only compose of around 8% online sales at this point. It's anybody's guess when online sales will reach market saturation. Based on some surveys, 50% is the ultimate limit. So it's likely in the future that Amazon annual revenue will be more than the stock's market cap. Crazy, yes I know. I believe people are still buying the revenue growth story hoping that Amazon will turn very profitable at some point and bring down the PE multiples lower via improve in efficiency or reduction in competition (not likely). So maybe further gross margin decline or earnings weakness will sway the current beliefs and slow down the beast? Probably, but until the revenue growth is near its zenith, Wall Street will continue to buy (or appeared to buy) into this so called miracle.
Sentiment could be changing now, next year, or longer. Who knows. But just make sure that you're ready, when the wind changes direction. I'm sure there will be many signs. The longer the numbers did not add up, the higher the chance of Amazon collapsing. Since this is still a strong momentum stock, it'll probably take more than one earning miss to take down the bulls.
The share price is a reflection of the grandeur regarding how well AMZN will be able to further penetrate the retail arena, which only compose of around 8% online sales at this point. It's anybody's guess when online sales will reach market saturation. Based on some surveys, 50% is the ultimate limit. So it's likely in the future that Amazon annual revenue will be more than the stock's market cap. Crazy, yes I know. I believe people are still buying the revenue growth story hoping that Amazon will turn very profitable at some point and bring down the PE multiples lower via improve in efficiency or reduction in competition (not likely). So maybe further gross margin decline or earnings weakness will sway the current beliefs and slow down the beast? Probably, but until the revenue growth is near its zenith, Wall Street will continue to buy (or appeared to buy) into this so called miracle.
Sentiment could be changing now, next year, or longer. Who knows. But just make sure that you're ready, when the wind changes direction. I'm sure there will be many signs. The longer the numbers did not add up, the higher the chance of Amazon collapsing. Since this is still a strong momentum stock, it'll probably take more than one earning miss to take down the bulls.
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