Amazon Now Worth As Much As Target, Costco Combined

This is just one of the market valuations that I have not understood in the past (and still do not at the present). Amazon is one of my favorite companies and I buy stuff on the site all of the time. My caution on the stock in recent years (due to a sky high valuation) has been proven wrong, as the stock keeps moving higher. Amazon continues to steal market share in the retail sector from bricks and mortar storefronts as more and more people spend more online. I would have thought most people who prefer online shopping would have already adopted it as a way of life, but evidently that trend continues unabated.

tgt-cost-amzn

I would not consider buying the stock at current levels, however, as I simply cannot figure out why Amazon should be worth as much as Target and Costco combined when the latter two firms earn 7.5 times as much money and do so at similar profit margins. It is true that Amazon is growing faster but the valuation discrepancy seems to more than account for that. Of course, if they keep growing market share, perhaps Amazon can grow at current rates for far longer than many ever would have thought. While I surely would have loved to own the stock this year, I am content simply being a satisfied repeat customer.

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One Thought on “Amazon Now Worth As Much As Target, Costco Combined

  1. Why Amazon beats brick and mortar stores I can understand – people go to real stores, see what they like, then return and buy it online for less.
    Amazon simply users retail stores’ real estate for marketing!

    What I don’t understand is how Amazon keeps afloat given its prices are higher than established online companies like TigerDirect , eBay or Frys.com , for example.

    True, Amazon’s product range is wider than the one of TigerDirect, but still there are VERY few cases in which I actually *had* to buy something from Amazon, i.e. it wasn’t available elsewhere for even less.

    My observation has probably little to do with market valuations, but it must be related to underlying business principles.

    Amazon is overly expensive and that should start feeling the moment the online market gets saturated.

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