What do you think is the most overrated large company, and why?

Rules
- must be publicly traded
- must be "well known" colloquially (i.e. your mom should know about it)
- any industry
- a brief, non-technical explanation
- must post your most overrated company BEFORE replying to others.


For me, it's very easy. Amazon (AMZN) .

The way I think about it is, if Amazon disappeared overnight, life would continue without anyone noticing. Can easily shop online at Target, Wal-mart, etc etc. Or perhaps the retailer's own website. The same cannot be said about Google, Boeing, Pfizer, etc

No no, actually MonacoMonkey, you're wrong (you might be thinking)... there's plenty of companies that could "go away" and my life wouldn't change. Lots of companies have competitors with similar products (i.e. if Chevron went away, I'd get super unleaded from Exxon or BP. No more Aquafina (Pepsi), I'll get a Dasani (Coca-Cola) instead. Fair argument, it seems.

HOWEVER, a company with such little differentiation (such as Amazon) should NOT be giving the ludicrous valuation multiple that it has. In fact, it's treated as a "tech" company (FANG) alongside REAL innovative companies such as Google (Google 3D maps, streetview, cloud, etc). when it's nothing more than a retailer masquarading as something special. It's a disgrace, actually.

*I have no position in AMZN, nor do I plan on initating a position (long or short) in the next 18 months.


 

It's called a simplification. And to be fair, if you know anything about physical trading, the oil companies have almost identical verticals, from upstream E&P to refining, and out to downstream. This is barring a few specialized markets (such as Hawaii).

So in a sense, yes, I'd shrug it off. And so would you, as I assume your car is equally happy with Shell or Valero.

 

Amazon currently has 43% of ecommerce market share by volume. Their closest direct competitor in online sales is Walmart, which has less than 15% of the market share right now (maybe a few pts off).

AMZN's existence is basically a direct threat to almost every brick-and-mortar store in the world. They are expanding their base and branching out into more industries and they have a gigantic lead against competitors. The reason why Sears is filing bankruptcy in the next few years and other retail stores are shutting down is fueled by AMZN and ecommerce.

My guess for most useless? Pfizer comes close I guess. I can't see what we would lose if Pfizer was bought by another major company. Their R&D hasn't exactly been stellar, they are opting to buy smaller companies with promising drugs now (like other major pharmaceuticals).

 

AAPL.

Fun fact - Apple has tacked on $160B in mkt cap in the first four months of 2017, equal to three Tesla's, or almost one entire Disney. What is Apple's value exactly outside of its brand? What can Apple do that any of a handful of handset manufacturers cannot? The ecosystem is certainly "valuable" in the sense that it locks people in and gives them little in the way of alternative choices after a few cycles, but I don't see much intrinsically valuable there that cannot be reproduced by a series of well structured contracts with other OEMs. An equivalently sought after brand could be constructed from securing Bieber, Taylor Swift, Kanye and a few K-pop stars for a 10-year marketing lockup, which I'd venture to guess could be had for a lot less than $770 billion.

It's not a bad company or product, but it's no Saudi Aramco...

 

Anyone who doesn't think we're in a big tech bubble is being willfully ignorant.

That said, AAPL created the first PC and beat everyone by like a decade plus they also came out with the first OS and first legit word processor. Also came up with the first real smart phone. Without iPhones, we'd still be stuck with Palm phones and Blackberries. They also changed the music game with iTunes and the way they perfected devices to listen to music. And video on handheld devices. AAPL may be overpriced right now, but without it, we would likely be WAY behind where we are now.

 

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