Why Amazon’s stock price will beat Apple’s to $1,000

“Apple generates the vast majority of its revenue from hardware sales, not software. If the next piece of hardware bombs, Apple takes a hit. If the piece of hardware after that bombs, Apple takes another hit and we might have a trend. And so on,” Rocco Pendola writes for TheStreet.

“Without useful and beautiful hardware that people want to mix business and pleasure with, Apple dies,” Pendola writes. “Or maybe the devices remain useful and beautiful, but, for one reason or another, people no longer want to buy them. Same outcome: a fall from greatness.”

Pendola writes, “Amazon just disrupted the competitive landscape. In fact, it provided an Apple succession plan: Amazon unseats Apple as the dominant force in tech and related spaces. At several points over the last year, Apple stopped dictating the rules of engagement. As a result, Amazon will unseat Apple this decade as America’s premier company, without being No. 1 in market share for any device. It doesn’t even have to make money on hardware sales… Wall Street loves stable, well-oiled machines that don’t miss. It will run AMZN to $1,000 on confident anticipation of a dynasty by the end of the decade.”

Read more in the full article here.

MacDailyNews Take: iCal’ed for the moment when and if AAPL or AMZN first hit $1,000.

52 Comments

  1. “Wall Street loves stable, well-oiled machines that don’t miss.”

    Really ? Apple is very stable, perfectly oiled and has been growing rapidly for more than ten years, yet Wall Street continues to have a love / hate relationship with Apple.

    1. Funny too that Amazon’s foray into devices is heavily influenced by the leader – Apple. Amazon is more a follower, not a leader. I mean I like Amazon for merchandise but it doesn’t get my tech confidence dollars by a long shot. Apple reigns supreme.

  2. LOL. Where do these people come from? So AMZN, who operates on razor thin margins, will outperform AAPL? Ok. Someone either needs to go back to school or sell their shares in AMZN.

    Now, I don’t think that AAPL is infallible but it won’t be AMZN that tops them.

    1. How will Amazon beat Apple to $1000 a share? Jeff Bezos is a better entertainer than Tim Cook. Jeff Bezos has more powerful friends on Wall Street than Tim Cook. Apple has gone up about $40 in six months. Amazon has gone up $80 in five months. Apple’s P/E has gone from around 15 to 16 in six months. Amazon’s P/E has gone from around 150 in mid April to 316 in early September. (the P/E has easily doubled). Warren Buffett would rather invest in Amazon than he does in Apple because he understands Amazon more.

      All you have to do is look at the math and you can see that Amazon’s hare is outrunning Apple’s tortoise to see which stock will reach $1000 sooner. Wall Street says that Amazon has a far brighter future than Apple.

      Even though the whole idea that Amazon can compete with Apple when it comes to tablets seems absurd, but there are many out there that believe Amazon will take Apple down without even knowing how many tablets Amazon actually sells. Why? Because Jeff Bezos stole Steve Jobs Reality Distortion Field.

    2. Google will be the closet contender. Only 14 years old and keeping up just fine short of numbers of outstanding shares. Of course, there could always be a diamond in the rough that we have yet to pay attention too coming out of China.

  3. I think this advertisement business model will come to an end sooner rather than later.

    If every company is making money with advertising and nobody is selling for a profit, there won’t be any company left to pay for the advertising.

    It will end, it’s a bubble.

  4. So is this a back-handed death knell for Apple? This makes absolutely no sense. Apple makes money on their ability to meld the hardware and software into something that is entirely useful and undeniably desirable- so much so that large companies have to slavishly copy them just to keep up. No other business today does this nearly as well- Apple just gets it. Amazon, as of now, is just another ‘me too’ company trying to find a niche in the space that Apple invented and created. I like competition, but in no way is Amazon blazing innovative trails here. Apple OTOH will continue to innovate- ‘nuf said.

    1. I think Walmart will kill Amazon in the long run. Walmart is the genius in brick-and-mortal retail sales but is upended by Amazon at present. Never underestimate Walmart, they are lying low now but when they come up with a better model for melding brick-and-mortar with virtual marketing, Amazon will be thrown under the bus. Anyway, the present model of Amazon is a copy of what Walmart pioneered in the old model.

  5. First of all, its “the Street”.. A bunch of hit who*es that love to play Apple to bounce the market..

    I have seen so much crap from them that when someone quotes “the Street”, I just totally ignore the piece.

    Now, Amazon is a good solid company and wall street does love that as it fits all the usual rules of business. It does not excite, thrill, or impress, it just sits there and makes a few bucks while selling at 317 times earnings… (WOW WTF.!!!) Talk about manipulating a stock value. 🙁

    Apple leads the industry. If Apple did not show the way, there would be no progress. I mean after all, netbooks were just little cheaper pcs cause the industry had NO CLUE as to how to innovate.

    Next on todays list is????

      1. Is old Scotty even mentioned by anyone any more? He’s like old Rob Ederle of the Ederle Group (consisting of his wife, him, and some pet). Totally a tool and irrelevant. Just Apple bashers

  6. 1000 is an arbitrary number. If both the stocks reach/hover around anywhere near 1000, Apple’s market value still would remain multiple times over Amazon’s value. Apple had a few stock splits in its history, otherwise had they continued like Google’s run, they might have crossed the $1,000 per stock mark already.

  7. “Apple generates the vast majority of its revenue [Q2 2012: $39.2B, net profit $11.6B] from hardware sales, not software. If the next piece of hardware bombs, Apple takes a hit. If the piece of hardware after that bombs, Apple takes another hit and we might have a trend. And so on,” Rocco Pendola writes for TheStreet.
    “Without useful and beautiful hardware that people want to mix business and pleasure with, Apple dies,” Pendola writes. “Or maybe the devices remain useful and beautiful, but, for one reason or another, people no longer want to buy them. Same outcome: a fall from greatness.”

    “Amazon just disrupted the competitive landscape… As a result, Amazon will unseat Apple this decade as America’s premier company, without being No. 1 in market share for any device. It doesn’t even have to make money on hardware sales… [Amazon Q2 2012 revenue $12.83B, Net profit $7M]”

    So on at least 2 ifs and a maybe, Amazon will most certainly overtake Apple by selling everything under the sun for a net profit of $7M, while Apple sells a handful of amazing products: both hardware and proprietary software, as well as certain related third-party products in its retail stores, while creating unprecedented excitement over each release? (In fact, the one thing neither Amazon nor Samsung, nor anyone else in the industry can duplicate is the excitement at each Apple product launch.)

    Someone please give Rocco his meds…

  8. Pretty much the opposite is true. Amazon as a online retailer has never had to envest in products before so I could keep going with a meager <1% margin. But by getting into hardware one just one failure will wipe out the company. Let's realize I think Tim Cook actually made more money last year then Amazon. If the Fire continues to fail to gain traction Amazon will post a loss. This is something unexceptable for a company with a PE ratio over 300.

    1. Amazon continues to obfuscate. Q1 earnings were juiced by an accounting manipulation. They have yet to reveal any actual tablet sales or their accounting for them or the seasonality. They claim 22% of US tablet sales but say nothing of the zero percent international. The HD models could miss ship date, if there are software issues or FCC doesn’t approve. Guess they held back on seeking FCC approval for product secrecy reasons or they didn’t have a working model. Amzon will continue to be squeezed by higher shipping costs, imposition of sales taxes, and overhead of new distribution centers. Bezos will continue to blame “infrastructure investments” for the lackluster earnings and the “street” will keep buying it undtil one day it doesn’t, then look out below. By they way, I belevie Amazon was already over a 1000 once in the late 90’s -before the bubble burst.

  9. Amazon releases lame Kindle Fire tablet, pundits declare the iPad is finished and that Bezos is the new Steve Jobs.

    Kindle Fire crashes and burns.

    Amazon releases next generation of lame Kindle Fire tablet, pundits, declare the iPad is finished and that Bezos is the new Steve Jobs.

    Oh wow, I wonder how it’s going to turn out this time.

    1. While I agree the laggy kindle fire 2 is bad, and they won’t end up telling us how many we’re sold, out of embarrassment, and their stock is hugely overvalued, they will sell a few of them and make enough money to keep this going until next year.

      It will make it hard for anyone besides Apple to sell tablet hardware for a profit. It will keep all the tablet software sales in Apples tablet market.

    2. Yeah but this time released with mandatory advertising and no opt out. No way I would buy into that Faustian bargain. Everything about Amazon’s offerings aka droppings seem very unattractive to me. Only the original Kindle reader with no advertising was a nice product. (The irony is small devices simply don’t have room in their small displays for such nonsense.) When it comes to color tablets I think we know who rules the roost in an attractive and well thought out device (with NO blackmailing advertising inherent).

    3. You still have to realize that despite the earlier Kindle’s Fire fizzling out after Christmas, the stock itself has continued to climb faster than Apple’s. Jeff Bezos and Amazon has turned losing into winning and that’s a pretty good trick. Investors don’t even care how many Kindle Fires are sold as long as Jeff tells them that those tablets are selling “tremendously well.” Amazon has somehow convinced Wall Street that it is a better company than Apple and Wall Street believes it and that’s very important for valuation.

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