Re:Amazon is the new Walmart
by pmoriarty on Sunday August 06, 2017 @05:46PM
(#14943776)
If there's one thing that I've learned from living through the first internet bubble is that there's no such thing as a stock price that's "too high" or "overvalued". Some people will pay anything as long as they think they think they can sell it for a profit to the bigger fool.
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This is true.
Unfortunately markets have limited supply of fools with money. When the supply runs out, there is a correction.
Figuring out when the correction happens is hard. It can take several years before the AMZN value is corrected. I would say that it happens within three years, but I could be wrong.
People were constantly predicting Amazon's fall (and that of a ton of other skyrocketing stocks) throughout the whole of the first internet bubble. They were all wrong, until they were right.
There is difference between company failing and company price collapsing. Amazon may do fine, it's just that Amazon's price will be radically adjusted.
When Internet bubble busted in last time. The Four Horseman of Tech (Microsoft, Dell, Cisco and Intel) lost 75% of their market value.
Intel was valued $73.94 in 2000, now it's 36.3. The value of the stock never recovered even if the company is still going strong.
Microsoft's value has been below it's bubble valuation 16 years and it broke it's previous record last year.
It took Amazon stock price 10 years to recover from 2000 bubble.
The problem is akin to the land speculation from before the Great Depression. At some point, someone gets "hung" with it because there is no one else to sell it to. It'll be interesting to see where Amazon falls, though it may be many years.