In this article, we will take a look at the 5 most overvalued companies according to the media. If you want to see more stocks in this selection, go to the 10 Most Overvalued Companies According to the Media.
5. Amazon.com, Inc. (NASDAQ:AMZN)
Flagged Overvalued by Number of Articles: 3
Amazon.com, Inc. (NASDAQ:AMZN) is a Seattle, Washington-based diversified technology company that is led by its e-commerce division and a growing cloud computing segment. Furthermore, the company is also involved in digital streaming and other aspects of the technology sector.
Presently, the shares of Amazon.com, Inc. (NASDAQ:AMZN) are trading at a forward EV/EBITDA multiple of 14.33x. This represents a premium of 56.35% when compared against the sector median forward EV/EBITDA multiple of 9.16x. In a research note issued on November 22, Thomas Champion at Piper Sandler highlighted that the growth of Amazon Web Services (AWS) has started to slow down in line with the difficult macroeconomic environment. Furthermore, there has been a widespread belief that the slowdown in the growth of consumer discretionary spending could take a toll on holiday spending, adversely impacting Amazon.com, Inc.’s (NASDAQ:AMZN) growth prospects.
Here’s what Farnam Street Investments said about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2022 investor letter:
“Change doesn’t just impact investors. Business people also bet for or against change. Jeff Bezos was once asked this exact question:
“You can build a business strategy around the things that are stable in time. It’s impossible to imagine a future ten years from now where a customer comes up and says, ‘Jeff, I love Amazon, I just wish the prices were a little higher.’ Or, ‘I love Amazon, I just wish you’d deliver a little slower.’ Impossible. So we know the energy we put into these things today will still be paying off dividends ten years from now. When you have something you know is true, you can afford to put a lot of energy into it.”
A lot of energy… and more than $172 billion in capital expenditure in the last fifteen years.
Deeper, slower moving layers turn exponential growth into “S-curves.” A rapidly dividing bacteria crashes into the resource-wall of its Petri dish. Nineteenth-century commercial robber barons were smacked by the governance layer of the Sherman Antitrust act. Amazon (NASDAQ:AMZN) Prime free shipping leaned on the creaking infrastructure of the U.S. Postal Service until it was forced to invest in its own infrastructure (all those delivery vans you see driving around).
Hopefully, next time you’re thinking about change, you can recall pace layers as a helpful construct to understand how successful systems change.