The stock performance of Amazon stock is nothing less than amazing. From a price of under $2 in 1997, the stock is now valued at $1,339.60.
However the road to this price was not always up. In March of 1999, Amazon’s stock price was in the $80 range. In November of 2008, the stock sold in the $50 range.
The stock price has really exploded since 2010. What is amazing is the price gain. Amazon stock now sells for over 200 times earnings (p/e ratio).
One of two things have to happen with Amazon stock – either the stock price has to drop, to get to a normal price earnings ratio, or there needs to be a rapid increase in net income, so that the price earnings ratio reaches a sane level. Interestingly, in 2008, amazons p/e ratio was 34.8. If Amazon’s stock goes back down to a p/e of 40, the stock’s value is $328.
I use Amazon and like Amazon. However, everyone already knows about Amazon, so it is difficult to see how Amazon can increase its customer base. I don’t know anyone who has told me that they are going to increase his or her purchases from Amazon (so that revenue at Amazon will increase sharply).
Mr. Bezos may know this. In August of 2016, Mr. Bezos sold a large number of Amazon shares, apparently to diversity his own portfolio.
Many companies who cannot grow internally, try to grow by buying other companies. In 2017, Amazon purchased Whole Foods. This places it in direct competition with Walmart.
Recently, there is talk that Amazon will be offering a delivery service to business, in competition with UPS, FedEx and USPS. Peter Lynch had a word for this – diworsification, expanding into areas which a business has no expertise.
Watch out for a big drop in Amazon stock. Even if there is a reduction in big box stores, such as Macys, there is no guarantee that Amazon will get all of the lost business from big retail.
If you have lost money from investing, and need assistance with securities arbitration, please feel free to contact
Attorney Robert M. Singer
2572 Whitney Avenue, Hamden, CT 06518
203-248-8278
rsingerct@yahoo.com