The share price should reflect future earnings. If you are a shareholder, you believe that amazon will continue to grow and that other people will continue to value its future earnings higher than the price you purchase at.
Amazon’s strategy is not (solely) to make a profit. It’s strategy is to invest in growth, sometimes in such a way that makes a loss or scant profit, to dominate markets in a way that gives them sustained competitive advantage.
If you bought Amazon and asked them to switch to simply profit making, then they could can a lot of the future growth stuff to get your trillions back. Comparing them to an apartment building which can only grow in line with a wider market (ignoring subdivision of apartments etc) is just a weird false comparison in my eyes.
What part of the comment you replied to implied that Amazon would never grow? The entire OP is about the growth that Amazon would have to do to fulfill certain scenarios (that would result in expected profit for investors.)
What I’m trying to point out (maybe I did a bad job!) is that it doesn’t make sense to try to run the numbers of how long it would take to return an investment in purchasing Amazon in profit, considering if returning investment capital in profits was Amazon’s goal they would behave in a profit maximising way rather than a growth maximising way. I just don’t think it’s the right question to ask (how long would it take to pay off buying Amazon from Amazon’s current profit margins) because the answer wouldn’t tell you anything interesting about how to value Amazon.
> …company's profits year after year, after subtracting all amounts reinvested in the business…
This does not mean the business will chase profits instead of growth.
I believe he’s paraphrasing value investing as described by Warren Buffett. I’d guess other investors have said the same thing although Buffett is quite well-known.
In particular, the market cap of a company should theoretically be equal to the net present value of all future and current cash flows. Therefore, (again, theoretically), if AMZN is priced correctly, the answer should be that you will break even, eventually.
Seen in this light, the company's job is to ensure that its stock is not priced correctly -- that you should actually be able to make a profit by buying AMZN (even the entire company) today.
Every time a company like Enron fails with positive stock value that theory is demonstrated to be objectively false.
As we know that theory is wrong we should discard it, which then opens the question back up. Anyway, expectations of future earnings are far from the only way stocks are valued. If you can predict a short squeeze for example you expect a jump in price independent of fundamentals.
Please don't attack a straw-man. As I wrote above, we're talking about profits "after subtracting all amounts reinvested in the business." So, taking into account all that future growth, will the company's future profits, after subtracting all amounts reinvested in the business, justify its price today?
The current stock price is always a prediction of future earnings x the probability of those earnings. A lottery ticket might in theory be worth 50 cents but have a high probability of being worth nothing.
In essence guessing if a stock is likely worth it’s current price is asking if it’s a low variance bet (T-Bills), high variance bet, or miss priced.
> The current stock price is always a prediction of future earnings
Maybe in theory, but in practice, at least currently, that’s not how the market is behaving.
The current stock price reflects the aggregated sentiment of past transactions regarding the probability of the actors being able to turn a profit now vs later. The person who is selling is either acting on the sentiment of cutting losses or realizing a gain, while the one buying is acting on the sentiment of the expectation of future gains.
Earnings might be one factor that informs sentiment, but it is not the only one or even the most important, especially for retail investors using Robinhood for example.
Are you taking a narrow view of earnings? As far as a stockholder is concerned a company being bought out qualifies as earnings even if they never turn a profit and are only bought for their IP.
You are right. I understood earnings as company earnings, as that is usually the meaning in the context of stocks. Now I realize you were talking about the stockholder’s earnings.
Given how bonkers all investment classes are right now, it’s a pretty sane question to me. Also, tagging a seemingly honest question as silly feels a bit harsh to me.
Are you sure they should be aiming to be profitable through the biggest expansion in at-home delivery ever? Or should they not have invested more in growth through this period? Surely it’s only unit economics that matter, not whether they are profitable?
On point 4 - I do think it’s tempting to say “we used to do it this way at my old place, and it was much better”. I call it “at my old place” syndrome.
However, if you never take your learnings from place to place, that’s also pretty useless isn’t it?
I think it’s more about how you communicate those learnings. Perhaps start by not suggesting they are better, just that you’ve also seen it done a different way in the past (I.e. avoid “at my last place...”) and you’re wondering why we do it this way instead. People are going to be much more receptive to not opening with “I know better”, especially because when you do it this way you often find they’ve already tried it the way that your previous place did it and it didn’t work for them for very straightforward reasons.
I think it's good to take notes on how you could improve things based on past experience for the first 30-60 days. Keep the notes to yourself. Review after you have more experience in the team.
You'll either find that the suggestions have some merit, in which case you'll have more credibility to make them, or that you learned enough about the new environment to know they weren't useful.
Well... A. Perhaps this “Internet forum commentator” has more relevant experience than you understand, B. You don’t need to have years of scientific study to understand statistics and C. Plenty of bad science gets published every year in journals.
If labor costs less products as a result cost less. How do you reconcile your view with the success of Singapore? A country with no minimum wage and a comparatively free market. There is income disparity in every time and every place. The question to ask is do the rules of the game allow anybody to succeed. Minimum wage is a rule that says some people just don't get to play.
> How do you reconcile your view with the success of Singapore?
A country general success does not equal the success of its poor people. There are not many income inequality stats of Singapore, but the ones I've seen [1] actually put Singapore with a similar income inequality to the US.
Furthermore, it is a small country (5M people) with a pretty high GDP per capita (8th in the world). I don't think you can extract too many conclusions that would be applicable to other, bigger countries.
> The question to ask is do the rules of the game allow anybody to succeed. Minimum wage is a rule that says some people just don't get to play.
And without a livable minimum wage, you'll get people that are working full time for peanuts. They won't be able to save, get healthcare, provide their kids with good education, etc. Are those people succeeding?
In this discussion a country's population is irrelevant. For a small country with a GDP per capita higher than the United States only 55 years after independence I would say they are doing pretty damn good.
There is no requirement that everybody succeed at the same level. The measure of a country's success is improvement of society over time. Has the general quality of life improved for the people of Singapore over the last 55 years? I think that is a resounding yes.
> In this discussion a country's population is irrelevant.
It's not. You'll see that a lot of the top companies in Singapore are operating at global level while headquartered in Singapore. It's a little bit like looking only at the economy of the main US cities.
> There is no requirement that everybody succeed at the same level. The measure of a country's success is improvement of society over time.
Inequality is a pretty important measure. What society is better, one where everybody earns two times a livable wage or another where 25% earn eight times a livable wage and the 75% remaining are in poverty?
There is always inequality in all aspects of life. We all do not perform on the same level. Looking at a specific point in time and comparing inequality is a poor measure of society. The only measure that matters is improvement over time.
Upon independence, "Singapore faced a small domestic market, and high levels of unemployment and poverty. 70 percent of Singapore's households lived in badly overcrowded conditions, and a third of its people squatted in slums on the city fringes. Unemployment averaged 14 percent, GDP per capita was US$516, and half of the population was illiterate." [https://en.wikipedia.org/wiki/Economy_of_Singapore#Independe...]
Compared to today, Singapore has about 1000 homeless, 3.16 persons per household, a literacy rate of 97.3%, GDP per capita of $602 billion, an unemployment rate of 4.11% and a median household income of $9,293. The income distribution isn't bad either. From what I could find the cost of living (minus rent) for an individual is $575 a month.
> Compared to today, Singapore has about 1000 homeless, 3.16 persons per household, a literacy rate of 97.3%, GDP per capita of $602 billion, an unemployment rate of 4.11% and a median household income of $9,293. The income distribution isn't bad either. From what I could find the cost of living (minus rent) for an individual is $575 a month.
By that same link, the bottom 10% of the population have less average income than your cost of living.
But I read a little bit more, and it looks like that they are indeed tackling the income inequality problem [1]. Which is where country size and GDP per capita comes into play: a richer country has more money to implement inequality-reducing measures, and implementing them for a 5M people country is far easier than for bigger countries.
> The better society is the one where everyone has an opportunity to improve their lot in life by satisfying a need of others.
Well, that's why inequality is important as a metric. If you're born in a poor household, statistically you'll have far less opportunities than if you're born in a better situation. Want everybody to have an opportunity to improve and succeed? Fight poverty.
This could just go in circles. What benefit does a job that doesn't provide enough of a wage to survive actually provide to the employee, except a way to waste their time while they accrue debt and wait for an emergency expenditure to bankrupt them?
If only there were less regulations, allowing the creation of more businesses which would compete for this man's labor, increasing the wages as a result.
I said intelligent conversation. Nowhere did I say this person is unintelligent.
I’m also struggling to find a coherent argument or disagreement in the comment I replied to, so no, I don’t have an issue with people disagreeing with me.
Let me help. You disparaged a guy's speech because he uses too many f-words for punctuation and emphasis than what you find acceptable, declared his work idiotic, ascribed completely made-up motivations to him ("gain attention by swearing"), and bemoaned the fact that mainstream media won't just ignore him. All in the space of two sentences.
My argument is that you're behaving like a tendentious grump. Every form of expression -- silly or serious -- is subject to being declared vulgar and unnecessary by self-important grumps. Random examples given, others are easy to find. Eventually you might find yourself arguing with another grump over some art or expression that you enjoy. Unless, of course, you just don't really enjoy anything.
As other commenters have pointed out, this only prevents counterfeit shoes being sold as real.
If that’s the intention, it would be much simpler to just make a database and print a code on each shoe (probably already done to some extent). Therefore when a user wants to know if a shoe is real or counterfeit, they could use the code on a website to find out if it was the genuine article.
That seems like it would have far more uptake and use than a cryptographic model requiring wallets.
If you read the use cases, a lot of their ideas revolve around marketplace. So it should have more to do with resale or transfer of digital asset. So when you are selling on a marketplace like EBay etc., having a valid digital token is a proof that you are trying to sell valid Nikes.
IMO they are tracking ownership of each pair with the help of these tokens and once the real shoe is sold the token is transferred to someone else's digital wallet.
Putting a QR code on shoe is not really effective as it can copied/pasted on a different shoe etc.
They are tracking ownership, but why does this need to be decentralized?
what advantage does Nike gain for it being decentralized vs everything getting a QR code and you can verify with Nike that the person you are buying it from is the registered owner of said QR code.
Because blockchains are great for exchange of value/transactions. Tokens can be easily transferred and hard to re-create and safe. They can be re-generated after each transaction and stored in a wallet.
Associating one QR code with one shoe is simply not the same thing. Nike doesn't have to make the whole ledger public through give the nature of blockchain, it can be assured that it has not been altered.
They don't have to with QR codes either, unless you're willing to enumerate all possible codes in their verifier.
Also the thing is not stopping anyone from providing a wrong code.
Unless every transaction concerning their shoes is recorded on the block chain, which it won't, and which brings privacy issues.
If the QR code/serial number can be duplicated, so can the digital token. The digital token is tracked by Nike to be uniquely owned you say? Why can't they do the same with the QR code/serial number?
It's just shoes, no one will own or need to transfer 0.124 of those shoes.
The share price should reflect future earnings. If you are a shareholder, you believe that amazon will continue to grow and that other people will continue to value its future earnings higher than the price you purchase at.
Amazon’s strategy is not (solely) to make a profit. It’s strategy is to invest in growth, sometimes in such a way that makes a loss or scant profit, to dominate markets in a way that gives them sustained competitive advantage.
If you bought Amazon and asked them to switch to simply profit making, then they could can a lot of the future growth stuff to get your trillions back. Comparing them to an apartment building which can only grow in line with a wider market (ignoring subdivision of apartments etc) is just a weird false comparison in my eyes.