

Amazon will be the Largest Company in the World and 1st Trillion Dollar Company - alexdmoore
http://alexdmoore.com/amazon-will-be-the-largest-company-in-the-wor

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drusenko
"They are currently valued at about $50BN, but are growing at about 20-25%
annually and will continue to do so for the next few decades."

Hello, unfounded assertion...

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onewland
"The housing market is growing 20-25% annually and will continue to do so for
the next few decades."

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nostrademons
He might simply be assuming a high inflation rate.

At 10% inflation, prices will multiply roughly 8x in 20 years, so a trillion
dollars would only be about $125B in today's dollars. That's only about half
of Wal-Mart's market cap.

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nopinsight
In the case that level of general inflation actually happens and other large
companies grow as much as well, one of the companies with higher valuation
than Amazon today would be first instead of Amazon.

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ajju
Amazon is leading two separate businesses that are growing very fast: online
retail and cloud computing. It's sort of like being in the chain store
business and the electricity business at an imaginary point in the 20th
century when they both were about to take off.

Disclaimer:I am (stupidly) waiting for a local minima in AMZN's stock price to
buy more.

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bdr
The stupid part about waiting for a local minimum isn't the waiting, it's the
thinking that you can even identify a local minimum.

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ajju
Indeed. I once gave a presentation on the absolute futility of trying to time
stock markets based on this excellent paper:
<http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1032962>

Given that and my long horizon, it is absolutely stupid, but that's (my) human
mind for you.

"On average across all 15 markets, missing the best 10 days resulted in
portfolios 50.8% less valuable than a passive investment; and avoiding the
worst 10 days resulted in portfolios 150.4% more valuable than a passive
investment. Given that 10 days represent less than 0.1% of the days considered
in the average market, the odds against successful market timing are
staggering. "

N.B.: To put a less stupid slant on it, I am _sure_ ;) that the markets will
shortly give in to periodic hysteria about the economy tanking, affecting
retail, taking Amazon down with them

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jacquesm
For 2009 they're listed as position 130 on the F500, so only 129 positions to
go.

Take a trend and make some wild-ass extrapolation.

I'm very much impressed with what amazon is doing in general but I don't see
them ever holding that top spot.

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alexdmoore
To answer some points: In 2008, revenue grew 29% to $19.17 BN. You can go back
over the past 5 or 10 years and nit pick, but the numbers are all solid and
within the ranges mentioned. I used 15% in the article over 20 years to
express my confidence in ecommerce overall and in Amazon's ability to
capitalize. The thrust of my argument is changing consumer behavior, but also
a strong long position on the value of computer science. Amazon will leverage
CS and technology generally better than all competitors. I stand by my claims.
The data backs it up. I am confident current trends will continue because the
underlying phenomena is so powerful.

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tungstenfurnace
>bullish future where our society continues to have plenty of natural
resources (oil, food and fresh water)

Thorium would cover a great deal of that; the critical resource we need is
_optimism_.

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jcnnghm
If I had just kept growing at 20-25% annually I'd be over 260ft tall today.

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pmc255
Yea.. there will always be overly optimistic bulls and overly pessimistic
bears. The future always falls somewhere in between. If you look back a few
years, you'll see that Amazon had its fair share of doubters. Analysts and
critics questioned their investments, and wondered whether or not they would
ever be able to sustainably turn a profit. Amazon's definitely done well, and
their long term philosophy works. See
[http://www.salaminder.com/2010/01/amazon-diversification-
diw...](http://www.salaminder.com/2010/01/amazon-diversification-
diworsification/)

Nevertheless, the OP definitely falls into the "overly enthusiastic bulls"
category. What large companies have grown at 15% a year for 20 years?

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buckwilson
"... in 20 years maybe. They're currently worth 5% of that though".
Paraphrasing the article of course.

At current trading, Wal-Mart is worth just over 204B, just for comparison.

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derobert
I grabbed the last four annual revenues for Amazon and Walmart from Google
Finance. The average growth (in revenue) for Amazon over that period is 31%;
for Walmart, 9%. World GDP growth is about 7% per year (over the last 30,
through '08).

Assuming those continue then Amazon will sell $1T nominal in 16 years.
Unfortunately for the author's claim, Walmart will do it in 12. And also
unfortunately, with that rate of growth, Amazon's revenue will exceed world
GDP in 41 years.

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kmavm
He seems to assume that market cap moves in lockstep with revenue. A company's
current market cap factors in expectations of future growth.

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karzeem
And by those standards, the market is as optimistic as OP; Amazon is trading
at a P/E of 76.

Edit: I don't mean this necessarily as vindication for OP. A P/E of 76 seems
very expensive.

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theashworld
I <3 Amazon, but I've started looking for alternatives (for buying, not for
reviews) ever since they started charging us NYers tax. Sure, not their fault,
blame NY state, but the point is, they are about 10% more expensive suddenly.
Summary: If they do become super-big expect more taxes or more hindrances.

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johnl
Beware of linear projections.

