Amazon and Apple are two of the most innovative companies around. But they have very different business models. Apple relies on premium designs and higher profit margins to stay as one of the most valuable companies in the world. Amazon uses aggressive pricing and its complementary services to offer value to its customers. While the Wall Street folks are in love with Apple, Amazon has some work to do to get in the good graces of the investors.
What they’re willing to do is trade earnings for ever-increasing market share, but at some point you have to make a meaningful profit… We can’t be buying something at 100 times earnings. That doesn’t make investment sense.
explained Chris Cordaro, head of Regent Atlantic Capital. It is no secret that Amazon has incurred losses to bring devices such as Kindle Fire to the market. Kindle Fire has not started shipping yet but it is already one of the best selling tablets on the market. Amazon has recently boosted Kindle Fire productions to meet demands for the device. The company is also having success selling those new E-ink readers.
Amazon has proven time and time again that it is a stock to be had by investors. Jeff Bezos has had a lot of success running his company as if earnings are not relevant. To change that at this point would be suicidal for the company. The Wall Street crowd may be frustrated with Amazon at this point. But it is one of few companies that can truly challenge Apple in the tablet market. Dumping Amazon’s stock for its long-term approach to profit does not seem a great idea.