Amazon is the new Walmart

If there's one thing that I've learned from living through the first internet bubble is that there's no such thing as a stock price that's "too high" or "overvalued". Some people will pay anything as long as they think they think they can sell it for a profit to the bigger fool.

I swear you could become a millionaire simply by investing according to the opposite of investment "insights" on Hacker News.

The mistake that you make is assuming Amazon is a "low margin retail business" like how Tesla just "sells cars". The valuation is based on the belief that companies like Amazon will continue to expand based on more foundational and fundamental principles. Amazon's thing is becoming the platform and de facto distributor of everything. Keep in mind, Bezos started Amazon by selling books online. Look at where it is now, and think about it what might be in ten years.

I make no judgement either way, but there are legitimate and sound reasons for why these valuations can be justified. Try to think bigger.

> Amazons market cap is $475B. Assuming 10% ROI and 3% profit margin, Amazon must make $16 trillion in revenue some time in the future to justify the current price.

3% of $16 trillion is $480 billion dollars. At a price-earnings multiple of say 10 the market cap would be $4.8 trillion. If $475 billion grows at 10% per year then it will take 24 years to grow to $4.8 trillion.

In 24 years total global retail sales might grow from $22 trillion to say $160 trillion. Is it so unreasonable to think that Amazon might have a 10% share of total retail sales in 24 years?

I have no position in AMZN besides passive index holdings but clearly not "everyone" agrees the stock price is overvalued as many continue to hold onto shares at the current price.

More importantly, in what world does a stock price need to justify a "10% ROI" or it's overvalued?

This isn't the 1960s anymore, and even if it was a 10% ROI would not be the equity risk premium, maybe 5-7% ROI. One also needs to adjust for inflation which AMZN does better than Treasuries. Looking at profits and ROI is no longer standard practice for many market participants, particularly in technology it's clear secular N/A dividend and negative P/E are now accepted practices, for better or worse.

The price of AMZN may go down, way down, or it might not, but either way your valuation technique is a dangerous one and I am very curious what stocks you do like if you are looking for a 10% ROI?

Stocks all over the world are now valuated on the hope that someone else will pay more than you. Not on any intrinsic cash flow of the businesses. This is the new normal.

True the stock is at an extreme price. But it's here to stay. Amazon has shown that they can expand their vision outside retail. I suspect that in time they will find a business model where their margins will be greater. It's a long shot but many people are hoping they find it. Hard to bet against Bezos.

Amazon is also on the infrastructure platform business that powers various multi-billion business like Netflix and Dropbox.

Who is to say what's overvalued? A class-A share of BRK is 200x a single share of Amazon, last I checked.