quote:
Twitter already has margins over 60%. Show me some O&G margins.

Calling Twitter unprofitable is (and I hate to use this word) a bit ignorant. Twitter is easily self-sustainable. They are showing losses because they are intentionally spending more than they make on marketing and growth. Because, if the growth potential is there, why not?

Twitter, right now is just like Amazon. I love Amazon. Literally I use it for just about everything I purchase outside of groceries. If there was a way for me to buy a car through Amazon I probably would.

However, I'm not the only one who feels that way, and thus the company is so overvalued right now it's not even funny. I read something the other day where Amazon would have to increase its revenue something insane like a hundred-fold to validate its stock price. There are alot of people who love Twitter to the same level, thus the insane overvaluing.

The same thing happened back in the day with IBM. They had a great product, but everyone knew it, computers were the wave of the future. You could have bought and hold IBM for next to a decade and never seem much change at all in your investment. The company, however, was strong, growing and turning profits each year, but these were unable to translate into gains for its shareholders due to the insane overvaluation of its stock.

And this is before we even get into the fact that anyone buying an IPO should stop investing immediately as they're only purchasing a speculative option that's always overvalued do to the instantaneous "have to have it now" nature of an IPO.

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Posted by Korkstand

Member since Nov 2003

28893 posts

Posted on 11/8/13 at 11:42 pm to FootballNostradamus

quote:
I read something the other day where Amazon would have to increase its revenue something insane like a hundred-fold to validate its stock price.

No, Amazon's price/sales ratio is only 2.24. Compared to Wal-Mart at 0.53, or Costco at 0.51, it seems a little high, but not abnormally high considering Amazon is growing revenue at 20%+ and the other two are barely growing at all.

You might mean Amazon needs to increase its earnings 100 fold, which would be closer to the truth, but not nearly the insurmountable task it sounds to be. I have discussed this here before and won't go deep into it again, but basically Amazon is putting any and all would-be profits into growth, and will continue to do so for the foreseeable future. There is absolutely, positively no reason for Amazon to show a profit until their growth slows down, and in turn the growth investments slow down. Whether that will take 5, 10, or 20 years is anybody's guess, but there seems to be little reason Amazon can't get as big or bigger than Wal-Mart.

Actually, I just found the AMZN thread from April, and you posted in it. Realizing now I should have bought some at $260 in April when I was singing their praises.