More worrisome for Amazon (AMZN)’s 500-billion market capitalization, Ovide underlined, is the fact that Amazon’s international retail operation lost money in Q2 2017 since Amazon’s operating profit was a “tiny USD 628 million”, less than Amazon Web Services’ at USD 916 million. Michael Yoshikami, founder of Destination Wealth Management, told CNBC that every investor knows that Amazon is all about growing, not about profiting.
This means that the AMZN market value would mainly be speculation rather than value investment, and that’s not a healthy development for the future. Indeed, the more Amazon will expand, the harder it will be to find room for growth. Also, the bigger it will be, the harder it will be to adapt quickly to any fast-growing competition especially from China.
Sooner than expected, some big investors could take their profit on the stock value and sell, not because they don’t believe in Amazon’s future any longer but because it’s time to take some good gains out of it – perhaps in view of a pullback healthy enough for a new buy. From USD 2.44 on May 1, 1997, the AMZN stock value has multiplied by 412 – +41,129 percent.
From bookstore to retail to web services to food, Amazon has turned into the ultimate company that covers almost the whole spectrum of sales. Only the future will tell if the commerce’s “Babel Tower” will withstand the vicissitudes of time.
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?