Valuation Observations for Amazon.com, Inc. (NASDAQ:AMZN)
Stock Traders Daily has issued a Valuation Observation for Amazon.com, Inc. (NASDAQ:AMZN). This observation entertains the market cap, revenue multiples, and an assessment of the businesses that have produced those multiples. We are using revenue multiples in our observation because PE multiples are not a relevant tool for evaluating the fair value of Amazon.
Amazon is a unique business whose valuation is not based on earnings.
Instead, it is our observation that the fair value of Amazon is one that is being placed on revenue and revenue growth specifically. As a result, revenue multiples must be used to properly valued the stock.
Here is an excerpt from that report:
“Proper valuation must discount non income producing businesses, and because 91.2% of the revenue generated by the company is non income producing that portion of revenue must be discounted in assessing fair value. We believe that both prime and cloud are growing nicely, but not enough to warrant 20 times revenue.”
The entire report, including our price targets and detailed fundamental observations is available now to clients of Stock Traders Daily, and to institutional clients of Reuters, First Call, and Zacks.
Lastly, we suggest that investors consider investing in proactive strategies as opposed to individual stocks and our LETS strategy is an excellent place to start that observation process.