1997
I remember the start of the internet. I remember 20 years ago when a small company called Amazon from Seattle went public and issued shares so it could sell more of its books online - this was all it sold at the time. At that time I had a US amazon.com account - I still do.
Since then it has grown into a rapacious global empire with a market cap of $450 billion. It is now the third most valuable company in America.
All of this is quite amazing, since the company has only ever made over $5 billion in net profit since 1997 if we adjust for inflation. Compare this with our old rival Facebook who has made five times more. But in the investment world it seems Amazon's brand is way beyond its earning capability.
Expansion over profit
Jeff Bezos as CEO has always favoured rapacious expansion over pure profit, and its plain to see it in the way he runs his day to day operations. But this can't last forever, and he'll need to find ways to reverse this process to increase cash reserves.
I myself have not purchased anything from Amazon for over 3 months now, and I tend to shun the retailer when I can to look for alternatives in the real world, as you'll be surprised at what you can find. I'd rather pay my local bookstore a few extra pounds than let Amazon make no profit from the sale whatsoever. Where is the justice in -$2.05 profit?
Rapacious empire building can accelerate growth, but if you can't show consistent profitability time after time, the next 20 years for Amazon might be tougher than the last 20 years.
Have an Amazon-free day!