Amazon’s main risk is getting too big to grow

“The lower the VIX, the richer the Jeff!” These are words you may hear in the next few days on Wall Street after the CBOE Volatility Index (VIX) reached an ultimate bottom at a level – hovering around 9.2 – unseen since 1993 and after Amazon (AMZN)’s founder and CEO Jeff Bezos dethroned – only for a few hours for now – Microsoft (MSFT)’s counterpart Bill Gates as the world’s richest person.

On June 2, 2017 the AMZN stock closed above the psychological level of USD 1,000 – USD 1,006.73 exactly – clearing the path for an even stronger upside momentum. With a 77 percent decrease in profit, growing sales and spending in Q2 2107, AMZN will continue to dominate the e-commerce scene for a long time, most analysts said.

If everybody seems confident Bezos has a long-term vision, one might fear that investors won’t be as patient as him while waiting for some profits. Indeed, the more Bezos justifies the slim profits because of never-ending expansion, the more investors “still keep expecting the magic moment when Amazon will become a profit machine,” Bloomberg columnist Shira Ovide wrote.

Getting bigger and bigger every day creates big expectations from investors and customers, meaning larger market shares come with larger – antitrust, legal – responsibilities and thus higher risk of disappointment. Summing up, if one seeks to become a do-it-all, one’d rather be good at everything otherwise one’s big enterprise might take a big hit even for a small scratch.

VIX & AMZN - Tradingview.com

Part 1: 20 years after IPO, Jeff Bezos’ Amazon stronger than ever
Part 2: Jeff Bezos’ Amazon has grown in sectors and places
Part 3: Amazon’s main risk is getting too big to grow
Part 4: Are “market value, few profits” sustainable for Amazon?

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