Does Amazon Ever Have to Earn a Profit?? How to Value Shares

Amazon is branching out at such a rapid rate it's amazing. Everything from developing robotics on the floor to speed shipping, fulfillment centers for same day delivery, drones, HBO shows for Amazon Prime, the list goes on and on and on ... 
Meanwhile, investors are frightened of the high Price to Earnings ratio, which is one the more worthwhile metrics to value a company by, especially for a mature company as it indicates if profits maintain their current pace and all earnings were paid out to investors, how long it would take before you recouped your original investment. 
So,when you see a PE of 150 or whatever Amazon's happens to be on the day you read this column. 

According to Amazon Bulls, the theory is that  as Amazon's growth opportunity slows, CEO Jeff Bezos will cut spending, and the savings will go directly into the bottom line, meanwhile Amazon would have cultivated a Giant base of loyal customers that enable revenues to stay stable. It's why Amazon puts such focus on features such as Subscribe & Save and faster shipping, etc? 

That's a fine argument, but I do my best not to invest in something I don't fully understand or believe to be truly an inexpensive, worthwhile investment.

If a company, such as Amazon, earns nothing for a prolonged period of time, it becomes exceedingly difficult to value shares. How much are they really worth? Will all the expense be translated into profit ever? When as a shareholder will we be paid a dividend? Obviously for companies that have yet to mature this is always a tough question, and we are willing to pay higher multiples because we expect growth, but will Amazon's margins ever be high enough to justify the PE it currently owns? 
I don't know the answer. I love Amazon as a company, and buy many things from them. But I don't even think I have enough understanding of the valuation/ pay-off time to buy their shares.

Invest in what you know/ understand. I myself simply don't have a clue what a share of Amazon should truly be worth. 


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