The second piece I want to remark on is Shira Ovide’s recent Bloomberg piece on developments at Amazon:
Investors haven’t paid a princely sum for Amazon stock all these years to have profits improve but revenue growth slow sharply. Investors waited for plumper profits for years. Now that the company has started to deliver, investors may be disappointed that some of that amazing growth has leeched away.
That Amazon would be able to produce the sort of growth that would justify its outlandish stock price has always been fantastical. Amazon began as an IPO looking around for a business model and prospered as that for longer than anyone can possibly have imagined. Now it has a business model, mostly based on retail services. We’ll see whether that satisfies its investors.
Here’s a prediction.
Amazon will split its shares 10:1 and be added to the Dow Industrials.
I wouldn’t be a bit surprised. However, it would further confirm that the DJIA has lost its mind. Amazon’s stock value is so far from the company’s fundamentals now that it completely distorts any putative relationship between the DJIA and the economy.
At 230 billion in annual revenue; for US corporations only Walmart, Exxon, Berkshire, and maybe Apple have more revenues. At 650K employees, only Walmart has more employees.
It’s getting to the point if Amazon catches a cold; the US will have the sniffles.