Why Amazon Is Risky And Pricey, But Hard To Bet Against
CNNMoney Digital Correspondent Paul La Monica said on today's Benzinga #PreMarket Prep that yesterday's Amazon.com, Inc. (NASDAQ: AMZN) earnings report was further evidence that "online commerce is not a passing fad or ancillary part of retail. It is increasingly the way for people to shop."
Given that, though, he said that it still does not "justify" Amazon's valuation. However, he stipulated that he doesn't see the company having a "spectacular fall from grace" after maintaining those high valuations for more than 20 years.
La Monica predicted that analysts would "rush to play catch-up" today to bring their earnings and revenue estimates higher. He said, however, that if analysts hike next year's earnings estimates from $2.87 to $5, the stock would still trade at "a triple-digit multiple" on 2016 estimates.
"Is the stock risky and way too pricey," La Monica asked rhetorically. "Yes, but why would you bet against this guy when he's proven the bears wrong for two decades now?"
La Monica also compared Amazon to other tech giants, including Apple Inc. (NASDAQ: AAPL), which he said was an "amazing bargain no matter how you slice it." The risk in tech, he added, was when all the "unicorns" start going public at these incredible valuations. That could send shockwaves through the industry, he speculated.
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