Amazon is a terrific company and I see room for growth. However its PE ratio is very high, should that worry potential buyer?
View Reddit by whiteshirtonly – View Source
Amazon is a terrific company and I see room for growth. However its PE ratio is very high, should that worry potential buyer?
View Reddit by whiteshirtonly – View Source
Definitely. High PE means the company must continue to grow and grow or else the stock will tank. You have to ask yourself where Amazon plans to grow into. They failed in china, and are trying india now, they wanted to get into groceries but how many people use Amazon Fresh or Amazon Pantry (hint, next to none). Etc.
Companies like Tesla and netflix could afford high P/E, because they had a large room to grow, Amazon is already hitting growing pains (they just declared last quarters margins were down, lowering non-prime shipping prices, etc).
Amazon’s not a terrific company. The only thing Bezos is good at is selling $1 for $0.50.
The PE is even worse when you realise the profits come from cloud business that is highly competitive and doesnt deserve a premium. The online retail business that deserves a premium doesnt make any profit.
This is not a recommendation to buy or sell. Stocks are not suitable for all investors. Please do your own research.
>should that worry potential buyer?
No!! AMZN in a long term will always yield. Best stock I ever bought.