In the past, I wondered how Amazon had a stock price per earnings ratio that was an order of magnitude larger than Apple’s. I was especially perplexed given that Apple has been profiting nearly as much as Amazon’s quarterly totals - in one day. Jean-Louis Gassée offers an explanation of why the companies are priced so differently.
On the Nasdaq stock market, AMZN trades at more than 174 times its most recent earnings. By comparison, Google’s P/E hovers around 17, Apple and Walmart are a mere 14, Microsoft is a measly 11.
This is so spectacular that many think it doesn’t make sense, especially when looking at Amazon’s falling profit margin.
Gassée’s analysis of Wall Street’s attitude toward Amazon makes sense. I also think he nails why Apple is treated differently. That said, I think analysts’ reasonings are severely flawed. Apple is treated like the rebel startup of the 1980s instead of the financial juggernaut of the 2010s. Meanwhile, a lot of trust is placed in Amazon to generate large profits - something they have yet to accomplish.