The enigma which is e-commerce giant Amazon.com, Inc.’s (NASDAQ:AMZN) relative valuation has intrigued and shocked me for quite some time. As a long-term fundamental value investor, finding the "value" story with this company for years has eluded me, and while the company's massive valuation multiple continues to fly in the face of conventional finance, investors continue to hang onto the fact that this e-commerce juggernaut has the makings of a truly dominant global player in this space, growing at a rate which appears to be accelerating.
Amazon's most recent earnings release highlighted a trend of accelerating growth, reigniting interest among technology and growth-oriented investors. A number of Amazon’s core business segments including third party subscriptions (an area I believe will end up becoming one of the company’s core profitability drivers over the long-term) have continued to increase at remarkable rates.
The mix in services provided by Amazon toward subscription-based services, fees, and highly profitable revenue (rather than revenue for revenue’s sake), has moved in the right direction, and from the perspective of a long-term investor, I can understand the increasingly positive sentiment.
That being said, as we enter the 10th year of a bull market that has continued to charge forward with ever-increasing ferocity, I believe valuation multiples will begin to come into focus as investors are forced to look toward value and find alternative investments which suit their needs as fixed income investments become more attractive.
Invest wisely, my friends.
