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Slower sales growth has investors balking at premium valuation
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Despite rebound, stock remains down over 46% from a 2021 peak
For years, Amazon.com Inc.’s aggressive growth strategy has enabled the stock to command a hefty premium to big tech peers. But with its expansion slowing, many investors are now balking at paying up for the e-commerce giant.
While Amazon’s valuation has dropped significantly along with the rest of the Big Tech group, it’s still by far the most expensive at 34 times profits expected over the next 12 months, according to data compiled by Bloomberg. That at a time when its growth is slowing sharply: analysts estimate revenue will expand just 8% this year, compared with an average of 24% over the past five years.
“When we compare Amazon to other large technology companies there is better value and a better risk-reward proposition at those other companies,” said Jason Benowitz, associate partner and senior portfolio manager at CI Roosevelt.
While Benowitz admires the company’s track record of long-term investments, he has questioned some of Amazon’s moves in recent years. Among those he’s skeptical of: the more than $10 billion the Seattle-based firm is plowing into a satellite