His company's profits are minuscule by any historical valuation but Amazon stock is at an insane valuation. For this value to be justified he would have to become the world's only distributor of everything.
Amazon's market cap at close today was $438 billion.
To match Google's earnings multiple, Amazon would need something in the ballpark of $14 billion in net income.
They're chugging toward $200 billion in sales. $14b in net income off of that is very reachable. Even if we apply a much more conservative premise to it, they're still growing above 20% - maybe it takes them $280b in sales to get to $14b in net income; they're going to get to that sales level within six or seven years plausibly. AWS alone is all but guaranteed to generate $5+ billion in operating income within a few years. The issue isn't whether Amazon will one day justify ~$400 billion, as that's very likely, it's how far from the future are the gains being pulled. 3 years? 5 years? 10 years?
With a 1.7% net income margin, Amazon would need $824B in sales to get $14B, compared to the $135B now.
As a reference, Walmart is largest company in the world by revenue at $438B. Apple $233B.
The P/E ratio tells you how many years to recover the cost of your investment. Amazon is at 187 years.
Weird that the catchcry for one is selling the cheapest crap possible, and the catchcry for the other is premium blend, no discounts. What about us poor folks in the middle? :)
Yes, I'm being a bit glib, but there's some truth in that analysis. People in the middle do try to buy some higher end goods in areas they want to signal status on... they do so selectively, but if they can afford it and its a product that makes a desired statement, they go for it. An Apple product that a billionaire would typically buy is often the same model that a middle income earner can buy, yet everyone knows they aren't the cheapest things around. On the other hand, if you're buying expensive in one area, you're also probably buying cheap in other areas, so Walmart, Ross, etc. are on the table for the middle earner as well.
For middle of the road price/products there's less prestige so you don't get that and there's can be debatable quality difference... so... the appeal can be less for something middling.
Where will the money for all of this come from ?
Why the comparison to real estate ? Is your argument that assets held by Amazon will appreciate somehow in the future ? If so which ones ?
Because he reinvests all the profit back into the company. Which makes sense- what is he going to do taking money out of the company anyway? Unless you want to buy sports teams or donate it to charity, the only thing you can do with the profits is invest them, and obviously you'd trust yourself as the CEO of a sprawling company to invest it the best.