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Amazing Amazon Stock Bubble

The shares of this online retailer were issued for an amount three times higher than that of Apple and almost twice as large as Google. And the reasons for this are zero.

In a situation where stocks may fall by 50%, but after that they are considered overvalued, then know that you are dealing with a financial bubble. Amazon (AMZN) long ago crossed all borders to inflate its shares, but investors still continue to pump billions of dollars into the company. Even if Amazon shares fell twice (from $ 164 to $ 80), in spite of this, they would still trade better than Google, Apple or even Reserch In Motion.

Amazon is still highly rated, the company recently reported sales and revenues, and it turned out that these figures exceeded the planned ones. Sales + 39%, revenues + 16%. The P / E ratio (an indicator of the ratio of the value of a share to its profitability) of Amazon shares is at the level of 67 units. This is three times more than 20.1 units of Apple or Google with its 24.6. Even more surprising is the fact that Amazon is trading 2.31 times higher than its five-year growth plan.

Finally, when analyzing the value of an enterprise (market capitalization minus its own cash) and return on capital, everything falls into place and we see how much Amazon shares are overestimated compared to Apple, Goggle and RIM. Amazon would have the lowest profitability. A year later, the buyer would be able to return only 1.6% of the current value of the enterprise.
With the direct purchase of Apple, for comparison, the return on investment would be 6.1%. RIM would return 8, 7% next year, and Google 4.6%. Obviously, future earnings are more important than the past activities of the company.
In general, the significance of the stock exchange in the west far exceeds its significance in Russia, this, as well as the complex mechanism of functioning and the formation of quotations, leads to such paradoxes. The inflated prices for Amazon shares, unsupported papers, the isolation (and, above all, and the prevalence) of the exchange side from the real segment and gives rise to such monsters. Financiers will play with this bubble until it makes a profit, even if its explosion is fraught with a series of suicides.

via tech.fortune.cnn.com

Source: https://habr.com/ru/post/106885/

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