Lord, it's maddening. I'm on a number of financial and investment sites, and I constantly bring this up when we're discussing them. I just do t get it. I admit that Bezos is a very smart guy, to deny that would be stupid.
But even very smart guys make mistakes. Heck, Jobs made more than a few. But Bezos's concept for the company was incorrect almost from the beginning. From the first holiday sales season after they began to get known, when they failed to ship enought product, in fact. After that, his plan for the company fell apart when they realized they needed to open warehouses and shipment centers. That was never the plan.
But Bezos promises Wall Street that big profits are just around the corner. But they aren't, and it's very unlikely they will ever be. The business model for the company that they must now follow won't allow it, and he just keeps digging the hole deeper every time his Apple envy has him coming out with another hardware product.
I'm just confused why Amazon as a 17 year old company still gets away with no profits. It's like other companies don't have large R&D costs or don't spend to grow. But only Amazon seems to be able to get away with running the company like a non-profit. I guess Bezos has the RDF that let's him get away with it.
I said the EPS was nine cents per share for a stock that cost $70.
They have PE of over 100 at its peak. With that type of valuation growth needs to be out of this world. Wall streets expectations was set low to fool main street. When the earnings were first released the stock went up 6%. The next day it took a dump. So obvious wall street was dumping shares.
I doubt that anyone was out to "fool Main Street". Facebook had a better quarter than expected.
I said the EPS was nine cents per share for a stock that cost $70.
They have PE of over 100 at its peak. With that type of valuation growth needs to be out of this world. Wall streets expectations was set low to fool main street. When the earnings were first released the stock went up 6%. The next day it took a dump. So obvious wall street was dumping shares.
We're talking about price now, which was under $60. They're doing pretty well. Last years sales were $7.9 billion with a profit of $1.5 billion, that's a net margin of 18.95%. That's pretty good. I don't believe you know as much as you think you do.
Google's issuance of Class C stock did not create any new votes, nor did it remove any votes from the owners of the Class A stock (who received the newly issued Class C shares on a one for one basis). The voice of the shareholders is just as diluted or concentrated as it was before the issuance. If someone sells their Class A shares and keeps their Class C shares, their voice will disappear, obviously (but then it will be owned by another person, so no real change in the "voice of shareholders").
In time GOOG (non voting) will decrease in value.
That happened almost immediately to nobody's surprise. Today class c shares (GOOG) were around 517 and class a shares (GOOGL) were around 522. The reason has nothing to do with dilution, which was the point of my correction for Corrections. Now, I have no doubt that Google's plan is to never issue any voting stock again, but rather use the non-voting class c shares for compensation and possibly for making acquisitions. That way, no matter how many class c shares they issue, the preponderance of votes will stay with Page, Brin, and Schmidt. When (not if) Google issues shares that are not granted one-for-one to class a shareholders, then it will be appropriate to talk about dilution of share value (still not a dilution of shareholder voting rights).
Do you know how Wall Street makes profits? Its not only from each other but from Main street. Fooling main street is how they make big money. If those number were TRUELY what Wall Street expected the stock would not have gone down. PERIOD.
$7.9 Billion of sales in one year is PATHETIC when the market cap of the company is $150 Billion. Profit of $1.5 billion is PATHETIC for a company worth $150 billion. Like I said its PE is 100, so it would take 100 YEARS to recoup your investment not even taking into consideration the time value of money. Net Margins don't mean jack shet when sales are so putrid in comparison to market cap.
In order to justify a PE of 100 you revenue grow and profit grow has to be close to 100%. FB fell way short of that. Also its no secret that young people are already leaving FB in droves.
You don't know what you don't know. The fact that you only pull up revenue, profit, and net margin by itself shows this. Those metrics are INCOMPLETE if you don't compare them to the price per share and market capitalization.
Oh please, I've been successfully investing since before you were born. I pulled up what was quickest to pull up. If you want to look at a bad P/E, look to Amazon. Don't make things up. What makes a high P/E is the EXPECTATION of high profits, not high profits. If you don't know that, you don't know anything.
I do not want to get in argument over this, but it does and I have taken Finance classes at one of the top business schools. It general understood that more hares dilute a value in the company, value is not the same as how much the share costs. Since we all know stock trade at a price which is far different than the true value of the company, the two are not equal. I generally do not like quoting wikipedia, but until a find a better source read and learn and I can tell this, it more complicated than this.
Yes, I read the other article which states Apple's reason for the split and some of this is the psychology of the stock which maybe true. This maybe wishful thinking on Apple part to help drive it up again, we will have to see. Also read what Warren Buffet has to say about stock splits and why he would never split the share in his company, guess what his far more knowledgeable than you and me about this stuff.
Oh i found this in Warren Buffets annual report and he also spoke out against what Apple did, he did not think it was good thing to do. He even use the some people think 10 $10 bills seem to be worth more than 1 $100 bill. yeah some people think more of something mean it has more value, it does not but having too much of something in the market can actually drive down it value in the market. I hope I am wrong and Apple knows what they are doing since very few company have split their shock when it was not growing and saw it increase not decrease.
Quote:
"We often are asked why Berkshire does not split its stock. The assumption behind this question usually appears to be that a split would be a pro-shareholder action. We disagree. Let me tell you why.
One of our goals is to have Berkshire Hathaway stock sell at a price rationally related to its intrinsic business value. (But note “rationally related”, not “identical”: if well-regarded companies are generally selling in the market at large discounts from value, Berkshire might well be priced similarly.) The key to a rational stock price is rational shareholders, both current and prospective.
If the holders of a companies stock and/or the prospective buyers attracted to it are prone to make irrational or emotion- based decisions, some pretty silly stock prices are going to appear periodically. Manic-depressive personalities produce manic-depressive valuations. Such aberrations may help us in buying and selling the stocks of other companies. But we think it is in both your interest and ours to minimize their occurrence in the market for Berkshire.
To obtain only high quality shareholders is no cinch. Mrs. Astor could select her 400, but anyone can buy any stock. Entering members of a shareholder “club” cannot be screened for intellectual capacity, emotional stability, moral sensitivity or acceptable dress. Shareholder eugenics, therefore, might appear to be a hopeless undertaking.
In large part, however, we feel that high quality ownership can be attracted and maintained if we consistently communicate our business and ownership philosophy - along with no other conflicting messages - and then let self selection follow its course. For example, self selection will draw a far different crowd to a musical event advertised as an opera than one advertised as a rock concert even though anyone can buy a ticket to either.
Through our policies and communications - our “advertisements” - we try to attract investors who will understand our operations, attitudes and expectations. (And, fully as important, we try to dissuade those who won’t.) We want those who think of themselves as business owners and invest in companies with the intention of staying a long time. And, we want those who keep their eyes focused on business results, not market prices.
Were we to split the stock or take other actions focusing on stock price rather than business value, we would attract an entering class of buyers inferior to the exiting class of sellers. At $1300, there are very few investors who can’t afford a Berkshire share. Would a potential one-share purchaser be better off if we split 100 for 1 so he could buy 100 shares? Those who think so and who would buy the stock because of the split or in anticipation of one would definitely downgrade the quality of our present shareholder group. (Could we really improve our shareholder group by trading some of our present clear-thinking members for impressionable new ones who, preferring paper to value, feel wealthier with nine $10 bills than with one $100 bill?) People who buy for non-value reasons are likely to sell for non-value reasons. Their presence in the picture will accentuate erratic price swings unrelated to underlying business developments.
Splitting the stock would increase that cost (transfer costs), downgrade the quality of our shareholder population, and encourage a market price less consistently related to intrinsic business value. We see no offsetting advantages."
I do not want to get in argument over this, but it does and I have taken Finance classes at one of the top business schools. It general understood that more hares dilute a value in the company, value is not the same as how much the share costs. Since we all know stock trade at a price which is far different than the true value of the company, the two are not equal. I generally do not like quoting wikipedia, but until a find a better source read and learn and I can tell this, it more complicated than this.
Yes, I read the other article which states Apple's reason for the split and some of this is the psychology of the stock which maybe true. This maybe wishful thinking on Apple part to help drive it up again, we will have to see. Also read what Warren Buffet has to say about stock splits and why he would never split the share in his company, guess what his far more knowledgeable than you and me about this stuff.
There is no change in value with a split. A $10/share stock with 1 million outstanding shares has a valuation of $10,000,000. You do a 10:1 split you now have a $1/share stock with 10 million outstanding shares and a valuation of… $10,000,000. No matter you slice it the spit does not change the valuation.
Oh wow, pulling up the 'ive been investing for 100 years card'. Please.
You comments about FB just show how little you know about investing. Both Amazon and FB can have bad PE's. I believe both are overvalued to an extreme. Sure PE measures expectation but expectation is confirmed by actual REVENUE GROWTH. And FB revenue growth was disappointing last quarter. Other factors such as young people considering facebook old fashion and the large risk of it being the next MySpace.
Facebooks Price to Revenue ratio is ridiculous. Its 16 to 1. The average S&P500 company is 2.5. For the stock just to remain flat they would need to grow revenue at a ridiculous rate. And they failed to do that last quarter. Facebooks $9B of yearly revenue looks like crap compared to its $150B market cap. Just to keep the price flat they would need to grow revenue to $20B in the next 12 months. That's over 100% growth. They achieved 70% growth last quarter. Compound that going forward 5 years and you can see why the stock got hit 30%.
Your remark that FB beat Wall Street expectations and thus the price should have not gone down is flat out ignorant. Just in the Dec13 quarter Apple beat Wall Streets 'expectations' and it still got smashed and lost almost 10% of its value. Wall Streets expectations are not to be taken seriously. They are just another way to fool Main Street and steal their money. The only way to find true value of a company is to calculate present value of future cash flows using 1, 5, or 10 year windows. Along with SWOT analysis to cover fundamental changes to the business. Depending on Wall Streets Quarter by Quarter estimates is foolishness.
Let's not get too carried away with conspiracy theories that Wall Street's estimates are based on a nefarious scheme to shaft Main Street. The tools that you describe for fundamental analysis such as SWOT analysis and present value of future cash flows are the same tools that Wall Street analysts use to come up with their earnings estimates and price targets. The reality is that unfortunately, you and I have the freedom to do what we want with our analysis but Wall Street doesn't have that freedom. Analysts are trend followers, not trend setters. If most of the analysts, especially the big-name analysts are bullish on a stock, a small-time analyst is not going to stir the pot and put out a bearish view. There is a strong sense of herd mentality. Also, chances are that no analysts will get too bearish on a stock. They don't want to rub the company's management the wrong way.
Bottom line is that you and I can do what we want with our analysis. Wall Street can't do that. I completely agree that depending on Wall Street earnings estimate or anything analysts say about a particular stock should be taken with a grain of salt. But saying that it's all a giant conspiracy to swindle Main Street is bit much.
Oh wow, pulling up the 'ive been investing for 100 years card'. Please.
You comments about FB just show how little you know about investing. Both Amazon and FB can have bad PE's. I believe both are overvalued to an extreme. Sure PE measures expectation but expectation is confirmed by actual REVENUE GROWTH. And FB revenue growth was disappointing last quarter. Other factors such as young people considering facebook old fashion and the large risk of it being the next MySpace.
Facebooks Price to Revenue ratio is ridiculous. Its 16 to 1. The average S&P500 company is 2.5. For the stock just to remain flat they would need to grow revenue at a ridiculous rate. And they failed to do that last quarter. Facebooks $9B of yearly revenue looks like crap compared to its $150B market cap. Just to keep the price flat they would need to grow revenue to $20B in the next 12 months. That's over 100% growth. They achieved 70% growth last quarter. Compound that going forward 5 years and you can see why the stock got hit 30%.
Your remark that FB beat Wall Street expectations and thus the price should have not gone down is flat out ignorant. Just in the Dec13 quarter Apple beat Wall Streets 'expectations' and it still got smashed and lost almost 10% of its value. Wall Streets expectations are not to be taken seriously. They are just another way to fool Main Street and steal their money. The only way to find true value of a company is to calculate present value of future cash flows using 1, 5, or 10 year windows. Along with SWOT analysis to cover fundamental changes to the business. Depending on Wall Streets Quarter by Quarter estimates is foolishness.
P/E has nothing to do with revenue growth. Apple didn't beat the street in December.
I do not want to get in argument over this, but it does and I have taken Finance classes at one of the top business schools. It general understood that more hares dilute a value in the company, value is not the same as how much the share costs. Since we all know stock trade at a price which is far different than the true value of the company, the two are not equal. I generally do not like quoting wikipedia, but until a find a better source read and learn and I can tell this, it more complicated than this.
Yes, I read the other article which states Apple's reason for the split and some of this is the psychology of the stock which maybe true. This maybe wishful thinking on Apple part to help drive it up again, we will have to see. Also read what Warren Buffet has to say about stock splits and why he would never split the share in his company, guess what his far more knowledgeable than you and me about this stuff.
Oh i found this in Warren Buffets annual report and he also spoke out against what Apple did, he did not think it was good thing to do. He even use the some people think 10 $10 bills seem to be worth more than 1 $100 bill. yeah some people think more of something mean it has more value, it does not but having too much of something in the market can actually drive down it value in the market. I hope I am wrong and Apple knows what they are doing since very few company have split their shock when it was not growing and saw it increase not decrease.
Buffet has stated, many times, over the years that he doesn't want to split because he doesn't want movement in the stock from "unsophisticated" investors. Of course, his stock has seen plenty of movement, because there is no such thing as a sophisticated investor, no matter who they are. Apple's stock is appreciating, as are sales and profits.
Let's not get too carried away with conspiracy theories that Wall Street's estimates are based on a nefarious scheme to shaft Main Street. The tools that you describe for fundamental analysis such as SWOT analysis and present value of future cash flows are the same tools that Wall Street analysts use to come up with their earnings estimates and price targets. The reality is that unfortunately, you and I have the freedom to do what we want with our analysis but Wall Street doesn't have that freedom. Analysts are trend followers, not trend setters. If most of the analysts, especially the big-name analysts are bullish on a stock, a small-time analyst is not going to stir the pot and put out a bearish view. There is a strong sense of herd mentality. Also, chances are that no analysts will get too bearish on a stock. They don't want to rub the company's management the wrong way.
Bottom line is that you and I can do what we want with our analysis. Wall Street can't do that. I completely agree that depending on Wall Street earnings estimate or anything analysts say about a particular stock should be taken with a grain of salt. But saying that it's all a giant conspiracy to swindle Main Street is bit much.
That exactly correct. A problem analysts have is that they can't be behind the crowd. If they make a mistake too often, particularly on the high side, they're gone. Unless everyone else made the same mistake. Investment managers, for example, are less interested in making their clients money, than they are in losing it. If they move with the market, they are safe. If they're a bit ahead, they're heroes. But if they're a bit behind, they get fired.
Comments
We were taking about Apple stock, weren't we? Straight buys?
My original point was that some investors may get hurt with this split because options fees are magnified 7x.
For straight stock it doesn't matter. Everyone does a flat fee for stocks.
Not a "regular broker".
I doubt that anyone was out to "fool Main Street". Facebook had a better quarter than expected.
We're talking about price now, which was under $60. They're doing pretty well. Last years sales were $7.9 billion with a profit of $1.5 billion, that's a net margin of 18.95%. That's pretty good. I don't believe you know as much as you think you do.
"DADDY! JUSTICE IS SERVED!"
The /s indicates sarcasm.
That happened almost immediately to nobody's surprise. Today class c shares (GOOG) were around 517 and class a shares (GOOGL) were around 522. The reason has nothing to do with dilution, which was the point of my correction for Corrections. Now, I have no doubt that Google's plan is to never issue any voting stock again, but rather use the non-voting class c shares for compensation and possibly for making acquisitions. That way, no matter how many class c shares they issue, the preponderance of votes will stay with Page, Brin, and Schmidt. When (not if) Google issues shares that are not granted one-for-one to class a shareholders, then it will be appropriate to talk about dilution of share value (still not a dilution of shareholder voting rights).
Really? Then we need to notice it.
Oh please, I've been successfully investing since before you were born. I pulled up what was quickest to pull up. If you want to look at a bad P/E, look to Amazon. Don't make things up. What makes a high P/E is the EXPECTATION of high profits, not high profits. If you don't know that, you don't know anything.
That's only 0.86%. That kind of change can easily happen hourly.
It doesn't dilute the value.
I do not want to get in argument over this, but it does and I have taken Finance classes at one of the top business schools. It general understood that more hares dilute a value in the company, value is not the same as how much the share costs. Since we all know stock trade at a price which is far different than the true value of the company, the two are not equal. I generally do not like quoting wikipedia, but until a find a better source read and learn and I can tell this, it more complicated than this.
Yes, I read the other article which states Apple's reason for the split and some of this is the psychology of the stock which maybe true. This maybe wishful thinking on Apple part to help drive it up again, we will have to see. Also read what Warren Buffet has to say about stock splits and why he would never split the share in his company, guess what his far more knowledgeable than you and me about this stuff.
http://en.wikipedia.org/wiki/Stock_dilution
Oh i found this in Warren Buffets annual report and he also spoke out against what Apple did, he did not think it was good thing to do. He even use the some people think 10 $10 bills seem to be worth more than 1 $100 bill. yeah some people think more of something mean it has more value, it does not but having too much of something in the market can actually drive down it value in the market. I hope I am wrong and Apple knows what they are doing since very few company have split their shock when it was not growing and saw it increase not decrease.
One of our goals is to have Berkshire Hathaway stock sell at a price rationally related to its intrinsic business value. (But note “rationally related”, not “identical”: if well-regarded companies are generally selling in the market at large discounts from value, Berkshire might well be priced similarly.) The key to a rational stock price is rational shareholders, both current and prospective.
If the holders of a companies stock and/or the prospective buyers attracted to it are prone to make irrational or emotion- based decisions, some pretty silly stock prices are going to appear periodically. Manic-depressive personalities produce manic-depressive valuations. Such aberrations may help us in buying and selling the stocks of other companies. But we think it is in both your interest and ours to minimize their occurrence in the market for Berkshire.
To obtain only high quality shareholders is no cinch. Mrs. Astor could select her 400, but anyone can buy any stock. Entering members of a shareholder “club” cannot be screened for intellectual capacity, emotional stability, moral sensitivity or acceptable dress. Shareholder eugenics, therefore, might appear to be a hopeless undertaking.
In large part, however, we feel that high quality ownership can be attracted and maintained if we consistently communicate our business and ownership philosophy - along with no other conflicting messages - and then let self selection follow its course. For example, self selection will draw a far different crowd to a musical event advertised as an opera than one advertised as a rock concert even though anyone can buy a ticket to either.
Through our policies and communications - our “advertisements” - we try to attract investors who will understand our operations, attitudes and expectations. (And, fully as important, we try to dissuade those who won’t.) We want those who think of themselves as business owners and invest in companies with the intention of staying a long time. And, we want those who keep their eyes focused on business results, not market prices.
Were we to split the stock or take other actions focusing on stock price rather than business value, we would attract an entering class of buyers inferior to the exiting class of sellers. At $1300, there are very few investors who can’t afford a Berkshire share. Would a potential one-share purchaser be better off if we split 100 for 1 so he could buy 100 shares? Those who think so and who would buy the stock because of the split or in anticipation of one would definitely downgrade the quality of our present shareholder group. (Could we really improve our shareholder group by trading some of our present clear-thinking members for impressionable new ones who, preferring paper to value, feel wealthier with nine $10 bills than with one $100 bill?) People who buy for non-value reasons are likely to sell for non-value reasons. Their presence in the picture will accentuate erratic price swings unrelated to underlying business developments.
Splitting the stock would increase that cost (transfer costs), downgrade the quality of our shareholder population, and encourage a market price less consistently related to intrinsic business value. We see no offsetting advantages."
There is no change in value with a split. A $10/share stock with 1 million outstanding shares has a valuation of $10,000,000. You do a 10:1 split you now have a $1/share stock with 10 million outstanding shares and a valuation of… $10,000,000. No matter you slice it the spit does not change the valuation.
Oh wow, pulling up the 'ive been investing for 100 years card'. Please.
You comments about FB just show how little you know about investing. Both Amazon and FB can have bad PE's. I believe both are overvalued to an extreme. Sure PE measures expectation but expectation is confirmed by actual REVENUE GROWTH. And FB revenue growth was disappointing last quarter. Other factors such as young people considering facebook old fashion and the large risk of it being the next MySpace.
Facebooks Price to Revenue ratio is ridiculous. Its 16 to 1. The average S&P500 company is 2.5. For the stock just to remain flat they would need to grow revenue at a ridiculous rate. And they failed to do that last quarter. Facebooks $9B of yearly revenue looks like crap compared to its $150B market cap. Just to keep the price flat they would need to grow revenue to $20B in the next 12 months. That's over 100% growth. They achieved 70% growth last quarter. Compound that going forward 5 years and you can see why the stock got hit 30%.
Your remark that FB beat Wall Street expectations and thus the price should have not gone down is flat out ignorant. Just in the Dec13 quarter Apple beat Wall Streets 'expectations' and it still got smashed and lost almost 10% of its value. Wall Streets expectations are not to be taken seriously. They are just another way to fool Main Street and steal their money. The only way to find true value of a company is to calculate present value of future cash flows using 1, 5, or 10 year windows. Along with SWOT analysis to cover fundamental changes to the business. Depending on Wall Streets Quarter by Quarter estimates is foolishness.
Let's not get too carried away with conspiracy theories that Wall Street's estimates are based on a nefarious scheme to shaft Main Street. The tools that you describe for fundamental analysis such as SWOT analysis and present value of future cash flows are the same tools that Wall Street analysts use to come up with their earnings estimates and price targets. The reality is that unfortunately, you and I have the freedom to do what we want with our analysis but Wall Street doesn't have that freedom. Analysts are trend followers, not trend setters. If most of the analysts, especially the big-name analysts are bullish on a stock, a small-time analyst is not going to stir the pot and put out a bearish view. There is a strong sense of herd mentality. Also, chances are that no analysts will get too bearish on a stock. They don't want to rub the company's management the wrong way.
Bottom line is that you and I can do what we want with our analysis. Wall Street can't do that. I completely agree that depending on Wall Street earnings estimate or anything analysts say about a particular stock should be taken with a grain of salt. But saying that it's all a giant conspiracy to swindle Main Street is bit much.
P/E has nothing to do with revenue growth. Apple didn't beat the street in December.
Buffet has stated, many times, over the years that he doesn't want to split because he doesn't want movement in the stock from "unsophisticated" investors. Of course, his stock has seen plenty of movement, because there is no such thing as a sophisticated investor, no matter who they are. Apple's stock is appreciating, as are sales and profits.
That exactly correct. A problem analysts have is that they can't be behind the crowd. If they make a mistake too often, particularly on the high side, they're gone. Unless everyone else made the same mistake. Investment managers, for example, are less interested in making their clients money, than they are in losing it. If they move with the market, they are safe. If they're a bit ahead, they're heroes. But if they're a bit behind, they get fired.