Dear Reader,
Amazon.com Inc, the American online merchandising and cloud services company, has been one of the biggest winners since the coronavirus disease COVID-19 pandemic lockdown. Amazon's stock market price and market capitalization is up approximately 28.7% year to date 2020.
The main driver of this increase has been increased volume of online sales and expected better revenue from cloud services. Due to the coronavirus lockdown consumers are increasingly shopping online for all sorts of products, including groceries. Companies are increasingly using cloud services to work remotely. Amazon is a player in video streaming as well and video streaming is a hot mega trend.
On first glance there are bright prospects for Amazon in the near future. Currently
Amazon is valued at 1.2 trillion USD by public markets. However, I believe Amazon's intrinsic worth is 800 billion USD currently. As things stand at the moment Amazon
is trading at a Price/Earnings ratio of 116.67. This is simply unrealistic. Amazon is already a huge company recording 280.522 billion USD in revenue in 2019. I doubt Amazon can grow very much more to justify a 1.2 trillion USD valuation in the next 3-5 years, unless, of course, Amazon enters forcefully and successfully other industries, which is essentially a farfetched assumption.
I believe in the last 7 years we have witnessed a technology stocks bubble driven by the largest technology stocks like Apple, Microsoft, Amazon, Alphabet and Facebook. There are even more extreme cases like Netflix, NVIDIA, AMD and lately Zoom Video. I forecast this technology bubble will burst in the next 2-3 years and there will be a major reset of technology companies valuations.
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Posledovich's.Petar Posledovich does not
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networks. The information presented is "as is".
Petar Vladimirov
Posledovich is not liable for any investment losses incurred by reading and
interpreting blogposts on this blog and posts on social networks.
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possess some of the securities, currencies or their derivatives mentioned in
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Respectfully yours,
Petar Posledovich
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