(Please note that this post is not a knock on the COMPANY Amazon- which is amazing- but its corresponding stock, AMZN, which is beyond insane.)
This will not end well.
During the first couple hundred years of the stock market, stocks would go up based on the promise of higher DIVIDENDS…ie. you invest in a company, they pay out based on their profits. When the profits go up, the company pays higher dividends, thereby getting investors to pay a higher premium for shares of that stock. With the higher amount of money invested, the company would expand its business. Sometime in the 1980’s, that very basic premise gradually eroded away, to the point where now, few traders under 30 even know what a dividend IS, and few under 50 even care.
Amazon currently has a market cap of $880+ billion, without paying a single penny of dividends. In other words, no matter how awesome the company is, there is NOTHING BACKING this price. The stock can drop 50% next week, and the company’s business model wouldn’t change one bit. It’s all based on faith and the continuation of finding new, overly excited “investors”. Charles Ponzi can tell you all about it.
Last but not least, for anyone wondering what $880+ billion can get you, check out this old blog about Apple’s stock price, and the ridiculous amount of things that Apple stock was worth more than. (At the time of the last blog post, Apple was worth a measly $650+ billion.)
justbecauselive 