Would investing in Amazon and Tesla actually be a mistake?

Article from The Motley Fool: https://finance.yahoo.com/news/2-stocks-could-lose...
With Amazon disrupting multiple industries and Tesla delivering promising technological advancements, many are buying their shares with extreme optimism. However, investing in these companies might actually make you lose money.

The key issue with Tesla is the fact that it's already trading as though it were a major car company. At $53 billion, its market capitalization is actually slightly ahead of Ford (NYSE: F). That's despite the fact that Ford's $150 billion in trailing sales and $4.4 billion in trailing earnings absolutely dwarfs Tesla's $11 billion in trailing sales $1.4 billion in trailing losses.

The past has been wonderful for Amazon.com investors, but for current investors, there's a lot of risk priced into its stock. Consider that from a revenue perspective Amazon.com's $161 billion is around a third of fellow retail titan Wal-Mart (NYSE: WMT)'s $495 billion, yet Wal-Mart's market cap is around half of Amazon.com's. The story is similar on an earnings front, too. Over the past four quarters, Amazon.com has earned around $1.9 billion, which is small compared with Walmart's $11.4 billion.

Looking at these numbers, the article does make a point that their shares are priced way higher than their own competitors, who are larger in scale and more profitable. What are your thoughts? Do you think investing in these companies is a good idea?

Comments (12)

Jan 23, 2018

Depends on your term of investment and your view of certain variables like growth.

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

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Jan 23, 2018

I'm planning on investing in Amazon myself and putting an automatic stop loss at ~10%. Limit the downside. On the other hand, EV's only make up 1% of the the vehicle market. I just don't get investors craze over Tesla.

Jan 23, 2018
TheDebtStar:

I'm planning on investing in Amazon myself and putting an automatic stop loss at ~10%. Limit the downside. On the other hand, EV's only make up 1% of the the vehicle market. I just don't get investors craze over Tesla.

Because in 20 years EVs will make up 90% of vehicles.

Jan 23, 2018

Yes, some aggressive estimates say so. XOM says EV's will be just 10% of the market. Some estimates have it closer to 30%. Even if you're right, whose to say much of that growth will be by Tesla when other companies are getting in on the market such as BMW and Volvo. Tesla's priced as if they're already selling millions of cars a year.

Jan 24, 2018
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