-Trading at a P/E of 125 or so
-Stock trading at it’s all time high after a fairly big miss in its latest earnings
-Many shareholders question the company’s intentions to focus on profits
-The company lost money last year and in 2 of the past 4 quarters
-It operates on (basically) 0% margins
Is This Even Possible?Yes, it certainly is. The worst part? I’m also tempted to buy. You might have guessed that I’m talking about Amazon (AMZN) the ecommerce giant that announced disappointing results. That being said, I continue to be a big believer in Amazon, what it’s doing and its longer term future. I’ve been saying this for some time and hoping for some kind of opportunity to buy. Like LinkedIn though, it’s just not happening. Both stocks have been rising with little to no pullbacks giving no chance to those who are interested buyers but concerned about the current valuation.
The concern with buying Amazon at these levels is that it’s certainly possible that 1 or 2 years from now, we could look back on those that were buying at this level as fools. You know those same kind of investors that were buying the dot com stocks just before the bubble collapsed? Of course, Amazon is not that typical dot com stock. It has an incredible business model and could start making major profits at some point, It’s also difficult to blame the company for being focused on growth rather than profits in an industry that is still growing so quickly.