Here is why I think Amazon is in a huge bubble. The first indication that I got that Amazon is in a bubble is its P/E ratio. It takes 240.99 years to get your money back.... WHAT!! if you have time and look up when companies exceed a p/e ratio of over 20 and do not bounce under that value their stock collapses. another big thing that led me to think that it is in a bubble because their EPS is so very very low. their current stock price is $955.10 but their EPS is $3.96 and not even 10% f the stock price, so that's a huge a red flag.
If you look at the chart it can keep on going up but to me I see it it going way down, even over 50% lower. I am not saying right now but when the wealth transfer happens I defiantly see it going way way lower. Right now the NASDAQ is at record highs and Amazon is apart of index and the NASDAQ look so over valued and the average p/e ratio is over 20.
so what are you thoughts on this? Are you investing in this company, if so what are you you thinking?
I got the image and charts from www.investing.com
Have a wonderful day!
Those are some good points. But as someone that lives in Seattle, applying to Amazon, and lives with an Amazonian, I'd have to disagree. Yes, Amazon's earnings per a share are barely recognizable but if you look in the past they were losing money and the stock was still rising. That is because they aren't actually losing money they are spending it faster than it comes in, which is actually impressive that they can spend so much and be killing it in retail when you look at market share.
I personally think you have to look at Amazon like you do with Tesla and SpaceX (I'm sure I can list a lot of new tech companies) and look at their growth in the next 5 years to justify the stock price. Amazon has so many products and projects in the works that will make them even more profits.
I'll agree that the P/E is outrageous and the stock market is on a full bull tilt with nothing to stand on, but I am sure Amazon will be one of the few top companies that will be recession-resistant coming in the next few years, because Amazon buys their stock back to inflate the price and pay their employees less, since the stock is highly valued, which is what Amazon needs. It would crush their payment mode if their stock was worth less, because they scale employee pay off of stock price when negotiating salaries.
well I just look at history every time a company does the same thing with their p/e ratio and they immediately fix that which we will find out this October 25 with they come out with their quarterly data, because they might be even worse position than now.
Is your reasons on Amazon based more on faith and hope and emotion or like data on companies?
do you think amazon is just beginning its bull run or it will flatten out or might fall, because if it falls it doesn't have much support?
I guess a little faith and data.
Amazon is building about 100 Fullfillmet Centers worldwide, an airplane fleet, and I believe a 16 billion dollar purchase of Whole Foods. All these expenses cost billions of dollars, which I believe explains the small earning per a share and the weak quarter for them.
That being said, I agree under most circumstances their stock should be devalued and trade at a lower price. However, Amazon can't have their stock dip much especially in October because that is when Amazon does raises, promotions, and some bonuses. If Amazon's stock dips they would have to pay all their employees that are up for advancement more money because the stocks that the employees have aren't worth as much and Amazon would have to supplement the employee's compensation with more cash. Because Amazon at the moment is paying their employees by factoring in the stock price and saying, " Your 20 shares are worth about $20,000 so we only need to pay you another $60,000 to get you to $80,000/year. So I believe Amazon will most likely continue buying back their stock at a price that they find acceptable, even if they have to take a loan out to do it.
Therefore, I think Amazon will remain flat or may even dip a little. Like you said there is not much support for the stock price, but Amazon will have to support it for their own selfish needs. I personally would be thrilled if it dropped in October and I hope I am wrong because my girlfriend is up for a promotion and it would be nice if she got a higher salary.(haha)
I love it when I find an article that makes me feel good while I'm reading. It's a beautiful point that flows with the current shift happening in humanity. I believe people want to do better and we are evolving into a more loving society.
you are a good writer..