Maybe I am just more sensitive to stock prices now that I am working at a public company. Amazon’s stock is shooting up over the last few days, the chart looks like the 1999-2000 days. Just look at the price/earnings that Amazon is selling at compared to some other incredible companies:
Amazon- 72
Apple- 32
Google- 36
Microsoft- 18
What the above means is that for every dollar makes, Amazon is worth $72 in market capitalization, where as for every dollar that Microsoft makes the company is worth $18. Now I understand why people think Amazon has a brighter future ahead, including the fact that it is smaller so has room to grow but is it 4 times brighter then Microsoft and twice as good as Google?
Seems to be a little crazy but at the same time we run our entire business on their computing cloud so selfishly I hope that they only do better.
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When I was at Amazon, we often heard two Bezos sayings (paraphrasing):
- When the stock price doubles, you’re not suddenly twice as smart. Just the same, if the stock price drops in half, you’re not suddenly twice as dumb.
- In the short term, the stock market is a voting machine. In the long term, it’s a weighing machine. (Credit for this thought goes to Benjamin Graham)
I’m no expert, but I suspect AMZN is one of those stocks the stock market will never get right. They hate that Bezos puts the customer experience ahead of the investor (and earnings) experience, particularly free shipping. Then there are these rushes of exuberance that come and go.
If I had any money (I don’t), I’d be long AMZN for a long, long time.
