A "guess" on the future of Amazon:
AMZN will some day become profitable but large enough profits to justify the current market cap (roughly 15 billion a year) are far into the future - if ever. The time value of money will make this a questionable investment looking forward even if they do achieve that level. There is a very substantial chance that they will become profitable at a level of more like about 3 billion a year after a few years (which is 3% of 100 billion in revenue - very good for a retailer) which would only justify 20% of their current market capitalization. That is my "rough" prediction. I don't think they will ever reach Walmart's revenue because they will never be a dominant purveyor of groceries and commodity goods - shipping costs are just too high to compete with Walmart's much more efficient distribution system - although Amazon may dominate higher value and niche items. Amazon's other endeavors - streaming music, AWS, Kindle, phones, etc. - one or more of these may get traction but I would not count on any of them - the competition is awesome and brutal and I don't see any inherent advantage for Amazon. I can make decent a case of why each one of these will play "second fiddle" to other companies and that is worrisome.
Therefore Amazon is not currently a compelling investment going forward - it is a very risky investment with a highly uncertain future. I can invest in a company like MAIN which is paying a 6% dividend and has a track record of capital growth. Investments like that - and there are plenty more to consider - and having a portfolio of them so that no single investment is more than about 4% of the total - has served me very well through the decades. One can make plenty of money without taking undue risks.
AMZN will some day become profitable but large enough profits to justify the current market cap (roughly 15 billion a year) are far into the future - if ever. The time value of money will make this a questionable investment looking forward even if they do achieve that level. There is a very substantial chance that they will become profitable at a level of more like about 3 billion a year after a few years (which is 3% of 100 billion in revenue - very good for a retailer) which would only justify 20% of their current market capitalization. That is my "rough" prediction. I don't think they will ever reach Walmart's revenue because they will never be a dominant purveyor of groceries and commodity goods - shipping costs are just too high to compete with Walmart's much more efficient distribution system - although Amazon may dominate higher value and niche items. Amazon's other endeavors - streaming music, AWS, Kindle, phones, etc. - one or more of these may get traction but I would not count on any of them - the competition is awesome and brutal and I don't see any inherent advantage for Amazon. I can make decent a case of why each one of these will play "second fiddle" to other companies and that is worrisome.
Therefore Amazon is not currently a compelling investment going forward - it is a very risky investment with a highly uncertain future. I can invest in a company like MAIN which is paying a 6% dividend and has a track record of capital growth. Investments like that - and there are plenty more to consider - and having a portfolio of them so that no single investment is more than about 4% of the total - has served me very well through the decades. One can make plenty of money without taking undue risks.
