Do you realize how many legitimate businesses and jobs were lost because they priced competition out? It okay if they won because of fair practices. But they are selling merchandise BELOW COST.
Doesn't Walmart do the same thing? It's just capitalism.
It would be Amazon's dream to sell Tablets/Smartphones below cost and wipe out Apple. Amazon would lose BILLIONS in the process but would wipe out the competition.
Is that something you really want to see?
That's exactly what Amazon did to hundreds of other companies.
Fortuately Apple is big enough and has enough cash to keep Amazon at bay. But so many other high quality companies and jobs were wiped out because of this unfair practices by Amazon
No, I don't. But Amazon's hardware products aren't even in the same league as Apple, so there are no worries there. I just don't see this as Apple vs Amazon, sorry. I won't be buying their stock but they're still a great company in my opinion.
No, I don't. But Amazon's hardware products aren't even in the same league as Apple, so there are no worries there. I just don't see this as Apple vs Amazon, sorry. I won't be buying their stock but they're still a great company in my opinion.
Sans the hardware, yes. However, they're trying to buy loyalty by offering these products below cost while their investors support the initiative. Which said investors obviously aren't into supporting as the drop off today shows.
No, I don't. But Amazon's hardware products aren't even in the same league as Apple, so there are no worries there. I just don't see this as Apple vs Amazon, sorry. I won't be buying their stock but they're still a great company in my opinion.
Amazon did serious damage to Apple and the entire industry by pricing their tablets at near cost, as did Google. They gave new ammunition to haters and anti-aesthetes who say that Apple is overpriced and fueled by greed. It didn't help that their tablets seem to have better displays than Apple's.
I really don't understand the gloating of Amazon taking a hit? Is it because they're a "competitor" of Apple? (I don't even see them as a competitor, personally).
I enjoy the hell out of my Amazon Prime membership. I am not interested in owning any of their hardware, but Amazon is a great retailer & they'll be around a long time to come.
I think the reason people chide Amazon is because they seem to get preferential treatment from the investment community, especially compared to Apple. So when Amazon gets hit by investors, Apple people feel like there is some justice happening. Frankly, I feel the same way. Apple gets punished when they make record profits because why? Amazon, like Microsoft and even Google, seem to have a Wall Street following that likes when they lose money and show no real way forward for making money.
Here is the reply to a complaint made to the UK's Competition and Markets Authority about Amazon's position in the market place:
We understand from your email that you believe Amazon’s alleged conduct towards book publishers will reduce competition to the disadvantage of consumers, businesses and the economy. We are grateful to you for bringing this matter to our attention.
We use the intelligence we gather, alongside our Prioritisation Principles (www.gov.uk/government/publications/cma-prioritisation-principles), to develop our pipeline of new projects and programmes of work and make the best use of CMA resources in terms of real outcomes for UK consumers. We have noted your complaint and brought it to the attention of our pipeline/intelligence teams; we may get back to you in the future if we pursue the issue. Thank you for highlighting this issue to us.
Amazon is leading the online retail market. I'm surprised there's so much hate here for the company and/or stock. They took a loss because they offered cut throat pricing and invested heavily in their future. Not because they have bad products or a bad business model or bad management.
I see the 10% drop as a buying opportunity.
Oh dear. Yes, Amazon is leading online retail. As it has done for some time. But there's no explanation for how investors are to see any benefit. There is no dividend and no-one has ever promised one.
Even after this drop, the price-to-earnings ratio is more than FIVE HUNDRED ! That means that, assuming that dividends will eventually be distributed, it will take a long, long time to see much benefit. And if Amazon seriously jacks their prices - as they might do - then their market share will drop and the share price will go along with it.
Anyone who sees a 10% drop in a 500+ P/E stock as a buying opportunity is just delusional.
They do not wipe out competition by selling below cost.
Maybe, maybe not. I don't know the answer to that. But WalMart does work hard to have a supplier become dependent upon it, and then squeeze that supplier to the wall and maybe out of business.
That's just their way of getting "Low prices, Every day". Some people benefit, many do not.
Personally, I would be OK with paying a little more for things that were made in the U.S. because that provides jobs to people in our communities. Which means that they're not on Food Stamps etc. They have a better life, and what's more - they have their dignity. That counts for a lot with me. It doesn't count for WalMart, despite all the flags they might plaster around their stores.
Doesn't Walmart do the same thing? It's just capitalism.
Yes, I expect Walmart do. That is exactly the problem with capitalism. We have globalised companies intertwined with governments in an unhealthy and tangled financial relationship. The evidence is there for all to see, especially in the USA, but here in the UK too, namely that all the people trying to earn a living by providing brick and mortar stores which give a place identity, character, history and a sense of community are being wiped out by rootless global corporations like Amazon and Walmart who sell the same products for loads less money that no small firm can compete with.
Why do you think that in my village, the baker, corner shop, garage and post office have all closed leaving us with just a pub? Why does the lovely town where I went to school now look hideous, desperate and almost identical to so many other towns - full of betting shops, pound shops, mini supermarkets and nail bars?
When your main motivation for choosing a supplier is low cost, this is the result. I've bought a few things off Amazon that are next to impossible to buy where I live such as small lithium batteries and other oddities but I try and buy everything locally whenever I can. Amazon and the supermarkets can all fold up and vanish tomorrow and it won't be a day too soon in my book.
Amazon is leading the online retail market. I'm surprised there's so much hate here for the company and/or stock. They took a loss because they offered cut throat pricing and invested heavily in their future. Not because they have bad products or a bad business model or bad management.
I see the 10% drop as a buying opportunity.
Your perspective on this is legitimate, Schlack. But for many others, there are plenty of reasons to resent Amazon. Chief among them is their relentless drive to stamp out local economies. Many think Walmart is bad in that regard. Amazon is Walmart on steroids. At least Walmart has actual brick and mortar stores all over the place, which are run by real people getting real pay checks. I love the Internet and technology, but I have no idea how cities and towns across the country are going to prosper if Amazon keeps growing in power and dominance, siphoning off dollars out of local economies and channeling all that money to a tiny fraction of workers and investors who most certainly will not be pumping that money back into 98% of those economies. Young people don't think about this much. But there eyes begin to open more as they age and raise families and try to start their own businesses in their own towns. At some point, communities have to band together and make a decision about the kind of life they want. And for the vast majority of those communities Amazon is not the bad guy, they are the worst guy.
The other beef many of us would have against Amazon is simply the fact that they've decided to take on Apple and compete against them. We're Apple fans here and we don't like companies that want to horn in on their markets.
Do you realize how many legitimate businesses and jobs were lost because they priced competition out? It okay if they won because of fair practices. But they are selling merchandise BELOW COST.
Do you really think that the competition would think it's 'OK' if Amazon won because of fair practices?
Walmart could have easily done what Amazon has done. Why didn't they adapt with the times?
You're intelligent, so do you know what Walmart did to Rubbermaid? If not look it up.
Amazon has been a Bezos scam from day one. They remind me of the old joke that goes something like this. We've sold thousands of these watches and people ask, 'how do you make money on a watch you sell for less than you paid for it?' Answer: Volume! That's Amazon in a nutshell, so continue to grab the bargains until peckerhead Bezos sells his shares in the company and disappears, right around the time Amazon disappears.
Suppose a business man comes to your town and opens 50 restaurant. He opens a restaurant right next to every single restaurant in the town. He puts a burger place right next to the Mom and Pop burger place. He puts an italian place right next to the italian place that was there for 50 years. But here is the kicker. The business man decides to charge $1 per meal. How long do you think the local restaurant will last? Now imagine if this Business man does this for 17 years.
I don't care how loyal the people in the town are those competing restaurants will go out of business. Then after 17 years the Business man decides to close all 50 restaurants and leaves. The towns economy tanks and hundreds lose their jobs. Later we find out that the Business man left with $20 Billion in his wallet. Come to find out that the local government was subsidizing his restaurant the whole time using taxes you were paying each year.
That is what Amazon is doing.
The Business man is Bezo's.
The local government is Wall Street.
The towns people are you and me.
Even if Amazon loses 80% of its value Bezo's is still going to make tens of BILLIONS of dollars.
So who's paying for this? Like in that town its YOU and ME.
Some of it are individual investors who buy Amazon shares. But most of it is the regular working class. Do you own Mutual Funds? Do you have a 401k? Then chances are you own Amazon. Amazon is part of any S&P500 Mutual Fund, Nasdaq Mutual Fund, any Tech mutual fund, and probably any growth mutual fund. So each of us are funding Amazon or paying them 'taxes'. We will be the ones holding the bag when this thing goes crashing down.
Wall Street will make Billions because they got in on the ground floor with the IPO. And you can be sure they will unwind their investment and cash in huge.
So enjoy your $1 meals for now. Just remember that we are all paying the 'taxes' to fund the largest PONZI scheme in the history of the world.
Excellent explanation, Sog35. But at the risk of being overly pessimistic it's even worse than you illustrate. Because those upstart restaurants that planted themselves next to the established local restaurants appear to be employing local workers in your example. And when they disappear, you can imagine local entrepreneurs popping up to take advantage of the restaurant vacuum. However, in reality, Amazon is sneaking off with local capital without pumping any of it back into it or giving anybody local jobs. And most likely they will not be disappearing any time soon. So homegrown local restauranteurs won't likely get another good opportunity to jump back in. Amazon is evil from the perspective of the traditional community based economies we grew up with. And the people who think "it will all work out for the best. Let the market decide" are not thinking it threw. They are just deciding to hope for the best without applying intelligence and common sense to estimate the logical consequences.
Amazon is leading the online retail market. I'm surprised there's so much hate here for the company and/or stock. They took a loss because they offered cut throat pricing and invested heavily in their future. Not because they have bad products or a bad business model or bad management.
I see the 10% drop as a buying opportunity.
But, the size of the online retail market is not as big as their bloated stock price justifies. By its very nature, retail operates on razor thin margins and in order to justify a high market cap, those companies have to report exceptionally high revenues and/or margins. Keep in mind that Walmart's revenues dwarf Amazon's by more than six times over, and Amazon's total revenues only outpoint Best Buy by about 30%.
Amazon's valuation is based on an expectation that there will be a payoff sometime down the road. That their current and historically non-existent profits will transform into consistent and growing profits in the future. That Bezos' investments will transform the company into a profit-making machine in the future. That their double digit revenue growth will continue for years to come.
That belief has subsidized all of their infrastructure investment and dabbling with media and cloud services. That belief allows Amazon to take losses on their operations in order to grab market share, and in essence, devalue other businesses that have to actually make money in order to survive.
If that belief breaks down, if Amazon's revenue growth shows signs of plateauing, then Amazon's stock becomes a house of cards, and it will be judged by the same metrics as other retailers and/or service providers. Increasingly, investors now wonder just when Amazon will flip the proverbial switch and start making the kind of money that actually justifies their stock price.
Comments
To think they do $20 BILLION in sales, and still not make any money. That just boggles the mind.
They should have went the way of Pets.com and Webvan ages ago. This is a sham of a company. Amazing they can still stay in business.
Do you realize how many legitimate businesses and jobs were lost because they priced competition out? It okay if they won because of fair practices. But they are selling merchandise BELOW COST.
Doesn't Walmart do the same thing? It's just capitalism.
It would be Amazon's dream to sell Tablets/Smartphones below cost and wipe out Apple. Amazon would lose BILLIONS in the process but would wipe out the competition.
Is that something you really want to see?
That's exactly what Amazon did to hundreds of other companies.
Fortuately Apple is big enough and has enough cash to keep Amazon at bay. But so many other high quality companies and jobs were wiped out because of this unfair practices by Amazon
No, I don't. But Amazon's hardware products aren't even in the same league as Apple, so there are no worries there. I just don't see this as Apple vs Amazon, sorry. I won't be buying their stock but they're still a great company in my opinion.
They should stick to services.
Sans the hardware, yes. However, they're trying to buy loyalty by offering these products below cost while their investors support the initiative. Which said investors obviously aren't into supporting as the drop off today shows.
Amazon did serious damage to Apple and the entire industry by pricing their tablets at near cost, as did Google. They gave new ammunition to haters and anti-aesthetes who say that Apple is overpriced and fueled by greed. It didn't help that their tablets seem to have better displays than Apple's.
Well they do sell the generic branded stuff.
I really don't understand the gloating of Amazon taking a hit? Is it because they're a "competitor" of Apple? (I don't even see them as a competitor, personally).
I enjoy the hell out of my Amazon Prime membership. I am not interested in owning any of their hardware, but Amazon is a great retailer & they'll be around a long time to come.
I think the reason people chide Amazon is because they seem to get preferential treatment from the investment community, especially compared to Apple. So when Amazon gets hit by investors, Apple people feel like there is some justice happening. Frankly, I feel the same way. Apple gets punished when they make record profits because why? Amazon, like Microsoft and even Google, seem to have a Wall Street following that likes when they lose money and show no real way forward for making money.
Here is the reply to a complaint made to the UK's Competition and Markets Authority about Amazon's position in the market place:
We understand from your email that you believe Amazon’s alleged conduct towards book publishers will reduce competition to the disadvantage of consumers, businesses and the economy. We are grateful to you for bringing this matter to our attention.
We use the intelligence we gather, alongside our Prioritisation Principles (www.gov.uk/government/publications/cma-prioritisation-principles), to develop our pipeline of new projects and programmes of work and make the best use of CMA resources in terms of real outcomes for UK consumers. We have noted your complaint and brought it to the attention of our pipeline/intelligence teams; we may get back to you in the future if we pursue the issue. Thank you for highlighting this issue to us.
Amazon is leading the online retail market. I'm surprised there's so much hate here for the company and/or stock. They took a loss because they offered cut throat pricing and invested heavily in their future. Not because they have bad products or a bad business model or bad management.
I see the 10% drop as a buying opportunity.
Oh dear. Yes, Amazon is leading online retail. As it has done for some time. But there's no explanation for how investors are to see any benefit. There is no dividend and no-one has ever promised one.
Even after this drop, the price-to-earnings ratio is more than FIVE HUNDRED ! That means that, assuming that dividends will eventually be distributed, it will take a long, long time to see much benefit. And if Amazon seriously jacks their prices - as they might do - then their market share will drop and the share price will go along with it.
Anyone who sees a 10% drop in a 500+ P/E stock as a buying opportunity is just delusional.
They do not wipe out competition by selling below cost.
Maybe, maybe not. I don't know the answer to that. But WalMart does work hard to have a supplier become dependent upon it, and then squeeze that supplier to the wall and maybe out of business.
That's just their way of getting "Low prices, Every day". Some people benefit, many do not.
Personally, I would be OK with paying a little more for things that were made in the U.S. because that provides jobs to people in our communities. Which means that they're not on Food Stamps etc. They have a better life, and what's more - they have their dignity. That counts for a lot with me. It doesn't count for WalMart, despite all the flags they might plaster around their stores.
Yes, I expect Walmart do. That is exactly the problem with capitalism. We have globalised companies intertwined with governments in an unhealthy and tangled financial relationship. The evidence is there for all to see, especially in the USA, but here in the UK too, namely that all the people trying to earn a living by providing brick and mortar stores which give a place identity, character, history and a sense of community are being wiped out by rootless global corporations like Amazon and Walmart who sell the same products for loads less money that no small firm can compete with.
Why do you think that in my village, the baker, corner shop, garage and post office have all closed leaving us with just a pub? Why does the lovely town where I went to school now look hideous, desperate and almost identical to so many other towns - full of betting shops, pound shops, mini supermarkets and nail bars?
When your main motivation for choosing a supplier is low cost, this is the result. I've bought a few things off Amazon that are next to impossible to buy where I live such as small lithium batteries and other oddities but I try and buy everything locally whenever I can. Amazon and the supermarkets can all fold up and vanish tomorrow and it won't be a day too soon in my book.
Amazon is leading the online retail market. I'm surprised there's so much hate here for the company and/or stock. They took a loss because they offered cut throat pricing and invested heavily in their future. Not because they have bad products or a bad business model or bad management.
I see the 10% drop as a buying opportunity.
Your perspective on this is legitimate, Schlack. But for many others, there are plenty of reasons to resent Amazon. Chief among them is their relentless drive to stamp out local economies. Many think Walmart is bad in that regard. Amazon is Walmart on steroids. At least Walmart has actual brick and mortar stores all over the place, which are run by real people getting real pay checks. I love the Internet and technology, but I have no idea how cities and towns across the country are going to prosper if Amazon keeps growing in power and dominance, siphoning off dollars out of local economies and channeling all that money to a tiny fraction of workers and investors who most certainly will not be pumping that money back into 98% of those economies. Young people don't think about this much. But there eyes begin to open more as they age and raise families and try to start their own businesses in their own towns. At some point, communities have to band together and make a decision about the kind of life they want. And for the vast majority of those communities Amazon is not the bad guy, they are the worst guy.
The other beef many of us would have against Amazon is simply the fact that they've decided to take on Apple and compete against them. We're Apple fans here and we don't like companies that want to horn in on their markets.
How many 'dead companies' have you seen have a $4 billion increase in sales? The loss isn't from a lack of business.
Do you really think that the competition would think it's 'OK' if Amazon won because of fair practices?
Walmart could have easily done what Amazon has done. Why didn't they adapt with the times?
You're intelligent, so do you know what Walmart did to Rubbermaid? If not look it up.
Have you checked out Amazon tablet sales relative to Apple tablet sales. Apple more than 10 to 1 over Amazon. FACT!
Let me illustrate it this way.
Suppose a business man comes to your town and opens 50 restaurant. He opens a restaurant right next to every single restaurant in the town. He puts a burger place right next to the Mom and Pop burger place. He puts an italian place right next to the italian place that was there for 50 years. But here is the kicker. The business man decides to charge $1 per meal. How long do you think the local restaurant will last? Now imagine if this Business man does this for 17 years.
I don't care how loyal the people in the town are those competing restaurants will go out of business. Then after 17 years the Business man decides to close all 50 restaurants and leaves. The towns economy tanks and hundreds lose their jobs. Later we find out that the Business man left with $20 Billion in his wallet. Come to find out that the local government was subsidizing his restaurant the whole time using taxes you were paying each year.
That is what Amazon is doing.
The Business man is Bezo's.
The local government is Wall Street.
The towns people are you and me.
Even if Amazon loses 80% of its value Bezo's is still going to make tens of BILLIONS of dollars.
So who's paying for this? Like in that town its YOU and ME.
Some of it are individual investors who buy Amazon shares. But most of it is the regular working class. Do you own Mutual Funds? Do you have a 401k? Then chances are you own Amazon. Amazon is part of any S&P500 Mutual Fund, Nasdaq Mutual Fund, any Tech mutual fund, and probably any growth mutual fund. So each of us are funding Amazon or paying them 'taxes'. We will be the ones holding the bag when this thing goes crashing down.
Wall Street will make Billions because they got in on the ground floor with the IPO. And you can be sure they will unwind their investment and cash in huge.
So enjoy your $1 meals for now. Just remember that we are all paying the 'taxes' to fund the largest PONZI scheme in the history of the world.
Excellent explanation, Sog35. But at the risk of being overly pessimistic it's even worse than you illustrate. Because those upstart restaurants that planted themselves next to the established local restaurants appear to be employing local workers in your example. And when they disappear, you can imagine local entrepreneurs popping up to take advantage of the restaurant vacuum. However, in reality, Amazon is sneaking off with local capital without pumping any of it back into it or giving anybody local jobs. And most likely they will not be disappearing any time soon. So homegrown local restauranteurs won't likely get another good opportunity to jump back in. Amazon is evil from the perspective of the traditional community based economies we grew up with. And the people who think "it will all work out for the best. Let the market decide" are not thinking it threw. They are just deciding to hope for the best without applying intelligence and common sense to estimate the logical consequences.
Amazon is leading the online retail market. I'm surprised there's so much hate here for the company and/or stock. They took a loss because they offered cut throat pricing and invested heavily in their future. Not because they have bad products or a bad business model or bad management.
I see the 10% drop as a buying opportunity.
But, the size of the online retail market is not as big as their bloated stock price justifies. By its very nature, retail operates on razor thin margins and in order to justify a high market cap, those companies have to report exceptionally high revenues and/or margins. Keep in mind that Walmart's revenues dwarf Amazon's by more than six times over, and Amazon's total revenues only outpoint Best Buy by about 30%.
Amazon's valuation is based on an expectation that there will be a payoff sometime down the road. That their current and historically non-existent profits will transform into consistent and growing profits in the future. That Bezos' investments will transform the company into a profit-making machine in the future. That their double digit revenue growth will continue for years to come.
That belief has subsidized all of their infrastructure investment and dabbling with media and cloud services. That belief allows Amazon to take losses on their operations in order to grab market share, and in essence, devalue other businesses that have to actually make money in order to survive.
If that belief breaks down, if Amazon's revenue growth shows signs of plateauing, then Amazon's stock becomes a house of cards, and it will be judged by the same metrics as other retailers and/or service providers. Increasingly, investors now wonder just when Amazon will flip the proverbial switch and start making the kind of money that actually justifies their stock price.
How many 'dead companies' have you seen have a $4 billion increase in sales? The loss isn't from a lack of business.
$4 billion gross, -$300+ net. It's from a lack of profits!