The Big Short: Amazon

kek fpbp

this is unironically exactly how genZ 'investors' make decisions when none of them experienced exposure to 2008.

Amazon literally and still is literally redefining product distribution.

Why you brainlets come to a fintech revolution board to tell us your retarded ideas is beyond me.

Kys.

If you think Amazon is overvalued then you don't understand the absolute dominance of AWS in cloud computing.

I'd actually go as far to say it's undervalued.

the idea it could pay dividends in the future

>It'll take 345 years to get back your money for every dollar you spend in this company. Which is also... reinvested in the company since they don't give out dividends.
That's not what pee ratio is, but 354 PE ratio is pretty hilarious actually. Bezos should just exit right now and create a generation of pink wojak normie investors.

he was obviously joking. rp'ing as a normie pleb investor, see here:

yeah I was expecting such an answer. thanks.

Then where are the fundamentals to justify the insane 1 year performance

wow 85% in a year, thats pretty cool

>Amazon literally and still is literally redefining product distribution.
That doesn't change it's intrinsic value.

If two top companies at the same level earning a lot of money. Company A is making around 20 PE, and company B is making around 350 PE. Guess which one is better? Even if they have similar assets/money flowing into it.

But amazon has less money and assets in comparison and is making less money as well. A value of a business is just that. Doesn't matter how much they "revolutionize" an industry.

>I'd actually go as far to say it's undervalued.
You're crazy then.
If I am buying a business today. I am buying it at how much it's priced right now. Not 5 or 10 years from now.

Right now, as an investor If I had to put money in any top company. I would put it in everything that isn't amazon.

How much did AWS investors have to shill Amazon to get to this price?

Markets don't trade on fundamentals, markets trade on emotions.

Right now that emotion is hype, which is matched by the rapid growth of the likes of AMZN. So unless you know exactly when the hype is going to stop (i.e. predict the collective investor sentiment) then shorting AMZN is a death wish.

Just short it with 10 dollars at 1000x leverage when it reaches 1999

>1000x leverage
proof that this board is full of children

Actually that's exactly what PE (TTM) ratio is.
For every 20 dollars, you get 1 dollar back. if the PE is 20.
So meaning, in 20 years, if the company's PE ratio is exactly the same it'll take 20 years for you to get back your money in the form of earnings.

> Feels bad i missed that one
Micron will still 2x by EOY (from current price) and it will likely 2-3x again the year after.

Look into chalchogenide seekingalpha.com/author/stephen-breezy/articles

The reasons people are betting on micron right now are mostly just temporary icing on the cake (bullish on dram demand, micron getting its shit together with nand and nand+memory products).
Silicon is about to get entirely blown the fuck out over the next decade and Micron is leading in competence, production and intellectual property.

Once people realize, the fomo will be unreal. You'll see MSM coverage about this "new switching technology" (it's actually old, but its only relevant now at small production nodes).

Shit has barely begun.

>Markets don't trade on fundamentals, markets trade on emotions.
100% agree.

I said not to short is right now. But eventually beginning of next year. The more the value of the stock is exponentially growing in comparison to the actual company, it'll soon be unsustainable.
Keep watching this stock.

>If two top companies at the same level earning a lot of money. Company A is making around 20 PE, and company B is making around 350 PE. Guess which one is better? Even if they have similar assets/money flowing into it.

>But amazon has less money and assets in comparison and is making less money as well. A value of a business is just that. Doesn't matter how much they "revolutionize" an industry.

How did you even find this board being so retarded. By your logic "too big to fail" would be a thing. Too bad history consistently proves it's not. It's almost as if metrics don't mean shit when they can't account for revolutionary measures. Fucking brainlet kys.

Got a problem with that?

>By your logic "too big to fail" would be a thing

That's the complete opposite of what I am saying. Wh

>t. 19 year old who just took his first corporate finance class.

>not an argument.

>Markets don't trade on fundamentals, markets trade on emotions.

I'm a big fan of fundamentals but you are correct. There are countless overvalued companies who are still gaining despite horrible numbers. The market is not rational!

So shorting Amazon is something I can not rationalize.
How the fuck do you value their contracts with the government? Especially their secret collaborations.
How the fuck do you value their know-how? They have some great concepts/methods to reduce the costs of distribution. And they are keep working on reducing them. Drones, machine learning, robots. They stay busy.

There are so many factors you can't put a number on it.

Yeah but shouldn't this P/E ratio be a kind of a wake up call? I get boomer mentality of waiting 20-30 years and having a nice portfolio to retire on but in 345 years you and your kids are already long dead. Only Japanese have the patience for that shit.

Yes i was looking into the new NAND QLC gate techniques and how they are cheaper but still, as if they (micron) arent already well known by now and have
>barely begun
Im still relatively new to semiconductors but micron was so easy to spot as a stand out.

I don't suppose people look back on a chart and project past results into the future? (as with crypto) cause Micron looks like its due for a pump.

AMZN
>Rev: $178
>Cash: $21
>Debt: $25
>Mkt Cap: $764
>EV: $768

APPL
>Rev: $229
>Cash: $20
>Debt: $116
>Mkt Cap: $913
>EV: $1,009

MS
>Rev: $90
>Cash: $8
>Debt: $86
>Mkt Cap: $743
>EV: $821

The basic snapshot of each company should instantly tell you that the valuations look fine. What you're failing to understand is that Amazon has extra speculative value built in due to being younger; however, your mistake is assuming this speculative value is a fault of the market. It's not. It's an expectation of the market that Amazon has the minds, technology, and ability to continue to improve and innovate.

You're suggesting they don't. You're suggesting either that their executive leadership is weak, their customer base is dwindling, their engineers are poor, or some combination of whatever you want. That's fine, but you have zero reason to believe that, whereas investors and analysts have spent years dwelling over this and believe there is a realistic possibility that Amazon can continue to deliver.

No, not necessarily.
You are making a big mistake by focusing on P/E.
More important, probably one of the most important fundamentals, is the cash flow of a company!

>25 debt
Buddy, amazon is 104 debt. with 3% margin of profit.

While Apple has 21% margin of profit.

Kid, Liabilities =/= Debt in calculation of EV. When I say debt, I mean interest bearing debt to creditors. You don't count shit like deferred taxes and accounts payable.

Just stop this thread. You're out of your depth.

This. Of course AMZN is high but if you bet right on this one you still win.

>Liabilities =/= debt
>what is debt to asset
>"hur when I owe money on something (liability) it's not debt!

Also look at the bookvalue to ratio is insanely high. (Assets - Liabilities / Market cap)
In comparison. You're basically paying 4.5 times more for amazon than apple for the book value. Apple and a lot of companies are already 20 to 30% overvalued. But when you're paying 4.5 times more for an already overvalued company. That's just insane.

>bookvalue.jpg

Amazon is purposely run to not boost the share price so any exuberance has to be exactly that

I already explained where that extra valuation comes from. Look up a DCF model, and how varied those forecasts can get when a company is still young and growing. Amazon is an exceptionally well performing and ambitious company. Just last week they even hinted at stepping into banking.

Also, you clearly don't understand nor care to understand the basics of financial valuation if you're seriously trying to mock me for teaching you how to calculate EV. So go ahead, retard, short it. Go all in.

...are you 14?

>forecast
>still young and growing
>ambitious company
All of this is speculation, not investment.
And does not justify the value of it today.

Also, shorting it today is also insane due to hype and emotions in the market. It's like shorting the dotcom bubble at 1999 Shorting it from a year from now will work.

A lot of people said the same thing for the dotcom bubble what you did to justify those crazy valuations. "revoluationary" "AWS" "Young and growing" are all nonsense for this overvalue of it.

Jeff Bezos is the greatest CEO of all time.

>It took, apple and google more then 30 years to get to this position. It took amazon around 10.

stopped reading here

Companies aren't valued on prior earnings (which is what a P/E ratio is), but on future expected earnings (there are metrics like Forward P/E for this). It's widely known that the reason Amazon's profits are so low, is because they keep investing so much money to grow, get into other industries etc. For eg, the recent acquisition of Whole Foods. And it's working. They had annual revenue growth of over 20% per year for the last 3 years. That's insane for a company of this size. A company like Apple, though similar in size, is much more mature, in that their expected revenue growth in the future is much lower, they've saturated their market, etc.

As an example of why future earnings matter: In 2008, Bank of America's stock price crashed, because people though future earnings would crash, even though prior year earnings were very good. By 2013, the stock price had recovered a lot, even though prior year earnings were still shit, so they had a high P/E ratio as well. But by now, their earnings have recovered to justify their market cap, so the people who drove the price up around 2013 were right.

Right now Amazon has a market cap of about $764B. A company like Amazon gets valued at around a 15 Forward P/E. So that means that investors think at some time in the future (and it could be 10 years, real-world investors are more patient than biztards), Amazon will have annual earnigns of around $50B. That's entirely reasonable given their current annual revenue of $177B, how fast their revenue is growing, and how they continue to to destroy their competition and enter new markets/industries

>"revoluationary" "AWS" "Young and growing" are all nonsense for this overvalue of it.

We've left the dotcom bubble 20 years ago, junior. Also, here's some advice: look at any company under 10 years old and compare them to a similar company that's older. The younger company will always, always, always have higher multiples because of speculative value. When people speculate on dogshit like pets.com or fuckmywife.com in 1999, yes, that shit will backfire. But speculating on proven young companies like Amazon, Google, Facebook, etc. is not likely to end badly. These companies, while young and growing, have sticky customer bases, proven methods of making money, and robust R&D.

You're the same type of person that looks at the 2013-2014 BTC chart and automatically believes that 2018 will be just like 2014. There's so much you don't understand, and it's painfully obvious, kid.

>looking at PE ratio for high growth tech stocks

Kek

Also someone asked about dividends. Yes people invest in stocks to get dividends. Once Amazon has nice stable earnings, they will issue a nice fat dividend, which is what investors are betting on.

Some people are talking about book value, assets, liabilities. That shit doesn't matter for companies that are healthy and have good earnings. That matters for companies you think may go bankrupt. For a company that's close to failure, that's losing money, and you think they may go bankrupt, you start to worry about liabilities. Because now you how to think about potentially liquidating the company, selling their assets to pay off their liabilities, and see how much money is leftover for shareholders. Earnings don't matter in that case, because there are no earnings.