
Amazon hits $1T market cap - craigferg501
https://www.cnbc.com/2018/09/04/amazon-hits-1-trillion-in-market-value.html
======
csomar
Okey Dokey, so I'm assuming Amazon has to reach singularity in order to
sustain that value?

Something is not quite right. We are reaching significant highs and the US
dollar is getting stronger. Several economies are collapsing mainly due to
their currency crashing against the USD (Turkey, Argentina, Egypt, Tunisia,
Iran, etc...).

I'll probably fail to find the comment but I was very bullish on tech stocks a
year or more earlier. I'm _still_ VERY bullish on them. Albeit I have to say
that the risks now for a substantial correction is starting to go up.

Here are two possibilities:

1\. Things go back to normal. Tech Stocks go up a bit more and then we
correct. Possibly getting into a bear market. This time is not different.

2\. This time it is different. Tech stocks carry on the bull market.
Everything is a bull market even the US dollar. This crashes pretty much the
rest of the world stocks and economies. The US economy and dollars crashes
several economies and makes a come back as the most powerful economy on the
planet.

~~~
irrational
How does the USD getting stronger lead to economies in other countries
collapsing? This is a real question, I really don't understand how or why this
would happen.

~~~
southerndrift
Weak economies often have some inflation and thus high interest rates. During
the time of almost zero interest rates in the US, people borrowed Dollars and
not their local currency to get money cheaper.

The problem arises now that the value of the Dollar is rising. People have to
exchange their local currency back into Dollars to pay back their credit
loans. They have to pay more than they expected which can be a problem.

~~~
skookumchuck
Is the value of the Dollar rising, or the value of the local currency falling?
I'd say the latter.

~~~
PacifyFish
To out-pedanticize (?) your pedantry, by convention currencies are valued
against other currencies - this is why the tickers at the bottom of Bloomberg
show USD-EUR, USD-CNY, et cetera.

In the context of this thread, you're expected to interpret "the value of the
Dollar is rising" as "it costs more Turkish Liras to buy a dollar today than
it did yesterday."

~~~
tuesdayrain
I feel like this is missing his point, and he was actually asking if the
change in currency value was mainly due to America getting stronger, or due to
the other countries getting weaker. So far this comment thread has been fairly
US-centric, and I believe he was suggesting it's more that these other
countries are just failing, rather than the US doing particularly well.

~~~
nradov
Currency values don't necessarily correspond to the strength or weakness of a
country. Sometimes countries that are strong in terms of GDP, military power,
or other metrics intentionally drive down their currency value in order to
improve their balance of trade.

------
samfisher83
You can justify Apple's valuation through cash flow. You can't do it with
Amazon. However it has always traded at a high valuation. Lets suppose it
becomes the size of walmart which close ~500 bil in revenue. On the retail end
their margins aren't really any better. So that is ~300 billion dollar
business. That would mean AWS + prime video/music + amazon ads are worth 700
billions?

~~~
cm2187
I'd say the bias is the other way. Apple is a one trick pony that is only
growing through raising prices, in a market where their value added vs
competition is becoming very thin. Not convinced their margins are sustainable
in the long term.

Amazon on the other hand, between cloud and online retail, not only still has
room to grow, and is building a moat around their business through the sheer
scale of their infrastructure (logistics + datacenters).

Both are fairly pro-cyclical though (retail & luxury products). If anyone
thinks the peak of the cycle is close...

~~~
coldtea
> _I 'd say the bias is the other way. Apple is a one trick pony that is only
> growing through raising prices_

For a company that started from computers, moved to media players, added music
stores, added smartphones, added app stores, added tablets, add cloud
services, added watches, and managed even the smallest of those categories
(e.g. watches) to be the size of a Fortune 500 company (4-6 billion) and
growing, it's rich calling it an "one trick pony".

~~~
bodas
Sadly, that man is dead. The accountant they have running things now is very
good at making money, but not very good at creating new products. They are
already selling $999 phones, it's hard to see how he can squeeze any more
money out of the iPhone.

~~~
scarface74
So exactly what in the foreseeable future is going to be more impactful than
the cellphone (not necessarily the iPhone)? What other product is owned by
close to 2/3rds of the worlds population and growing?
([https://www.statista.com/statistics/274774/forecast-of-
mobil...](https://www.statista.com/statistics/274774/forecast-of-mobile-phone-
users-worldwide/))

What other consumer electronics company is doing anything innovative?

~~~
stale2002
It has nothing to do with apple being better or worse than other consumer
electronics company.

It instead has everything to do with the fact that high end consumer
electronics is only so big of a market, and is one that Apple has almost
entirely tapped out.

Apple won the market, overwhelmingly so. But they can't win twice as hard,
when they've won already as much as they can.

~~~
scarface74
I agree and this is already priced in as well as the expectation of dividends
They are trading at a much lower multiple than the other tech companies.

------
bergerjac
I plan to start slowly getting out of tech stocks.

Since 2012, I've held stocks in Apple, Amazon, Google, and Tesla (also,
Microsoft and Intel, but sold those). I was skeptical about Facebook, so
didn't purchase.

I attribute my buying decisions to my knowledge gained from Hacker News. Thank
you everybody:)

Back then, the everyday person didn't have a clue what these companies were
doing. (My dad's friend was still betting on HP, and no one knew about AWS.)

Oil companies fail because they think they're in the oil business. When in
fact, they're in the energy business.

Toys "R" Us went bankrupt because they thought they were a toy-selling
company, instead of a child entertainment company. These companies fail to
innovate.

The great thing about tech companies... innovation is in their blood. The
problem is when that blood gets diluted and their purpose gets lost in "making
toys" instead of "entertaining children".

As I said above, I'm looking to get out of tech stocks. Looking for multi-
family property real estate options. Years ago I purchased and lived in a
duplex, then sold.

Looking for opportunities providing cash flow, and a proven product that's
been around for 1000's of years. If you know of anything, please see my bio.

~~~
mywittyname
> Oil companies fail because they think they're in the oil business. When in
> fact, they're in the energy business.

Correction, successful oil companies realize that they are in the financing
business. Exxon Mobil has the uncanny ability to earn billions of dollars
without selling a drop of their own reserves.

In this sense, the successful technology companies have realized that they are
also in the financing business. This is why I think Apple and Microsoft will
outlive Intel -- Intel innovates in their own market while Microsoft buys into
any profitable market and can capitalize on the arbitrage the comes from being
an established player.

~~~
humbleMouse
I think we can take this principle more meta. Once every business gets big
enough it should go in the finance business.

There is simply no easier way to make money than charging interest on
something.

------
baron816
Damn, Bezos is worth $166B. Also shocking, AAPL is already worth $1.1T and
MSFT is worth more than GOOG.

~~~
MrEfficiency
> Also shocking, AAPL is already worth $1.1T

This is why shorts on FAANG are so high.

Seeing GM, who has a gigantic infrastructure that is paid off being worth 60B,
but Apple has... fans? Patents?

Tech if anything can be changed in years.

I believe in Amazon and Google due to the sheer use from consumers and
business, but Apple is not like these.

They have a segregated population of non-business consumers using 1 product in
an increasingly saturated and competitive market. I dont know if I'm allowed
to say this on HN-

My (work) iphone has significantly less features than my pixel/android. Apple
needs to innovate NOW.

~~~
ectospheno
There is no lock on the door of Apple's walled garden. Speaking as someone who
lives quite happily inside - I have no plans on leaving.

Different people like different things. You liking things that aren't Apple is
no stranger than me liking things that are Apple.

~~~
themacguffinman
There are no locks because there are no doors, only walls.

You can't seriously suggest that leaving Apple has no costs, that leaving a
tightly integrated ecosystem that doesn't work well with anything else outside
its walls is a low barrier to exit.

~~~
yazaddaruvala
After 7 years, I switched from Android to iPhone 26 months ago. The only thing
I missed was the Swipe keyboard, but then I downloaded the Google keyboard for
iPhone, and I was satisfied.

Today, I still use FB Messenger, Text (iMessage by accident, but I just think
its Text), Gmail (+ Calendar), Spotify, Venmo, Dropbox, FB Events and a random
suite of utility applications that exist on both platforms (Chess Clock, etc).

My Androids were more robust and in 7 years never broke. My iPhone has broken
it's screen twice. It is harder for me to chrome cast onto my roommate's TV.
My iPhone is less configurable. My iPhone cost more.

Next time I buy a phone, I will not have any lock-in, but I'll buy a used
iPhone. No questions asked. I can't put my finger on why, but the experience
with the iPhone has been that good.

~~~
syspec
well i was not expecting that ending... Can you elaborate?

------
adreamingsoul
Seeing the beast from within makes me question everything.

~~~
myth_buster
I'll bite. What's not in public domain that would question the cap?

~~~
kornish
My guess is that the grandparent is just commenting on working conditions
inside parts of the Amazon org, the details of which are well-publicized at
this point.

~~~
justboxing
..or the great grandparent works in finance / accounting and has seen some
troubling numbers that are not public.

~~~
kornish
One seems likelier than the other.

------
a_c_s
Interesting to compare to the other Trillion dollar company:

Apple (AAPL) earned $11.04/share last quarter and trades for ~$228 today

Amazon (AMZN) earned $12.63/share last quarter and trades for ~$2,040 today

edit: formatting

~~~
mywittyname
For a more complete picture:

Amazon

    
    
        Revenue		52.89B	39.34%
        Net income		2.53B	1186.29%
        Diluted EPS		5.07	1167.5%
        Net profit margin	4.79%	821.15%
        Operating income	2.98B	375%
        Net change in cash	2.92B	-
        Cash on hand	19.82B	50.14%
        Cost of revenue	30.63B	30.62%
    

Apple

    
    
        Revenue		53.26B	17.3%
        Net income		11.52B	32.14%
        Diluted EPS		2.34	40.12%
        Net profit margin	21.63%	12.66%
        Operating income	12.61B	17.12%
        Net change in cash	-13.09B	483.36%
        Cash on hand	31.97B	72.16%
        Cost of revenue	32.84B	17.64%
    

Revenue for Amazon is climbing faster than for Apple. And Amazon's cost of
revenue is growing significantly slower than revenue while Apple's costs of
are growing slightly more than revenue.

~~~
kisstheblade
Could someone explain the math here. So amazon is worth almost 500 times their
income!? That doesn't make any sense even if they are growing like crazy and
investing their profits or something.

~~~
crispyporkbites
Net Income, not Income

They traditionally operate on low net incomes so they can kill other products
with low or negative margins, and own entire categories, instead of wasting
funds paying taxes and shareholders.

~~~
justboxing
> They traditionally operate on low net incomes so they can kill other
> products

Or as Walter White says in Breaking Bad. "Corner the Market, then increase the
Price. Basic Economics."

------
karanganesan
@SiliconHBO - 3 comma club Real Life - 4 comma club

Apple welcomes Amazon to it's club
[https://t.co/eRkWs8LkZB](https://t.co/eRkWs8LkZB)

~~~
dominotw
[https://www.bloomberg.com/view/articles/2018-08-28/tech-
inve...](https://www.bloomberg.com/view/articles/2018-08-28/tech-inventories-
are-near-pre-crisis-levels-as-growth-is-slowing)

Amazon doesn't have slowing sales and increasing inventory problem like appl
though.

------
myth_buster
30,000 ft view. [0]

It's interesting to see market's reaction post management issues were brought
to light.

[0] [https://imgur.com/ZdRpdiZ](https://imgur.com/ZdRpdiZ)

~~~
brad0
What do you mean by management issues?

~~~
myth_buster
Something along the lines of

[https://www.nytimes.com/2015/08/16/technology/inside-
amazon-...](https://www.nytimes.com/2015/08/16/technology/inside-amazon-
wrestling-big-ideas-in-a-bruising-workplace.html)

~~~
Applejinx
These are all pros, not cons, to Amazon's valuation. They are telegraphing the
idea that Amazon will destroy everything that stands in its way, up to and
including its own employees or even investors.

There is no kind of labor abuse or environment abuse in any sense that would
not be taken as evidence of Amazon's character (and not a weakness). And
again, this sociopathic behavior is what's being selected for by the market.
Amazon abusing people and situations is good, according to the market.

~~~
tvh
Spoken like Gordon Gekko. That's sadly true though.

------
mtgx
The US has too many monopolies. This is bad for everyone _except_ those
monopolies, including workers, consumers, and smaller competitors.

It's time for a new wave of trust busting.

~~~
bearcobra
I'm curious where you feel Amazon has a monopoly? Google and Microsoft offer
compelling alternatives for cloud infrastructure and the retail market has
tons and tons of competitors. I have a lot of concerns about the power
corporations like Amazon, but I'm not sure I see where the monopoly exists.

------
visarga
wow, that value is hard to imagine

~~~
bergerjac
It's all made up. Perception. (Disclaimer: I own both Apple and Amazon stock)

------
econ4all
Amazon undoubtedly benefited from google attracting the bulk of regulatory
scrutiny which is in large part because they have the same business model as
newspapers and they didn't much appreciate it.

