Topic 1 Amazon’s Empire
- The former bookseller accounts for more than half of every new dollar
spent on line in U.S.
- Since the beginning of 2015, its share price has jumped by 173%,
seven times quicker than in the two previous years.(and 12 times faster
than the S&P 500 Index)
- With a market capitalization of some 400bn, it is the fifth most
valuable firm in the world.
- Never before has a company been worth so much for so long while
making so little money: 92% of its value is due to profits expected
- Walmart already has revenues nudging 500bn and is beefing up online.
- Last year cash-flow (before investment) was $16bn, more than
quadruple the level five years ago.
- If it makes as much money as investors hope, a rough calculation
suggests its earnings could be worth the equivalent of 25% of the
combined profits of listed Western retail and media firms.
- Ground for skepticism does not come much more fertile than this:
Amazon will have to grow faster than almost any big company in modern
history to justify its valuation.
- In an era when executives routinely whinge about pressure to produce
short-term results, Amazon is resolutely focused on the distant horizon.
- Mr. Bezos emphasizes continual investment to propel its two
A third virtuous circle is starting to whirl around Alexa, the
firm’s voice-activated assistant:
So long as shareholders retain their faith in this model, Amazon’s
heady valuation resembles a self-fulfilling prophecy.
- Their faith is sustained by Amazon’s record.
- It has had its failures—its attempt to make a smart-phone was a
debacle. But the business is starting to crank out cash.（？）
- If Amazon’s approach to time-frames is unusual, so too is the sheer
breadth of its activities.（？）
A wingspan this large is more reminiscent of a conglomerate than a
retailer, which makes Amazon’s share price seem even more bloated: stock
markets typically apply a “conglomerate discount” to reflect their in-
Seen through this lens, Amazon appears pristine.
- Consumers applaud it; it is the most well-regarded company in
America, according to a Harris poll.
- If it gets anywhere close to fulfilling them, it will attract the
attention of regulators.
- But as it grows, so will concerns about its power.
- Investors value Amazon’s growth over pro-fits; that makes predatory
pricing more tempting.