“Dominant technology companies are increasingly using their monopoly profits not to invest in new research and development, but to acquire or bankrupt their competitors, buy back stock, hire lobbyists, or simply hoard cash.”
By Pam Martens and Russ Martens of Wall Street on Parade
On August 26, 2015 the market capitalization of just five Big Tech stocks totaled $1.889 trillion at the close of trading that day. Here’s the tally: Apple $625.532 billion; Google, $440.767 billion; Microsoft, $341.594 billion; Facebook, $245.795 billion and Amazon, $234.215 billion.
At the close of trading yesterday, those numbers stacked up like this: Apple $797.366 billion; Google $720.206 billion; Microsoft $918.312 billion; Facebook $467 billion; and Amazon, $833.365 billion – or a total of $3.736 trillion – almost a doubling of market value in less than four years.
Of particular note is that Amazon has increased its market value by more than three and a half times, despite its inability to show profits for much of its existence.
In December 2013, the International Business Times reported as follows about Amazon’s abysmal history of profits:
“So what’s with Wall Street’s love affair with Amazon.com?
“The company barely ekes out a profit, spends a fortune on expansion and free shipping and is famously opaque about its business operations.
“Yet, investors continue to pour into the stock, pushing up the company’s share price to $388, a nearly 400 percent rise since the end of the company’s third quarter in September 2008.
“At that time, Amazon’s net profit margin was 2.8 percent. By September 2011, that number fell to 0.6 percent. A year later, it was losing $274 million on net sales of $13.8 billion. And in the latest quarter, ended Sept. 30, the massive e-tailer reported a $41 million loss on $17 billion in sales.”
The International Business Times then ran a chart that captured a stunning business model – flat or non-existing profits over a decade.
And then, in January 2017, the Yale Law Journal published a brilliant 24,000 word forensic analysis of Amazon’s real business model by Lina Khan. The treatise was summarized as follows by Khan:
“Amazon is the titan of twenty-first century commerce. In addition to being a retailer, it is now a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space. Although Amazon has clocked staggering growth, it generates meager profits, choosing to price below-cost and expand widely instead. Through this strategy, the company has positioned itself at the center of e-commerce and now serves as essential infrastructure for a host of other businesses that depend upon it. Elements of the firm’s structure and conduct pose anti-competitive concerns—yet it has escaped antitrust scrutiny.”
Pricing below cost and operating in the red for years in order to grab market share from competitors would not have been possible for Amazon without those reliable “buy” ratings from Wall Street. Any antitrust investigation into Amazon’s history must include an in-depth investigation of the role that Wall Street played in that history — particularly the trading of Amazon’s stock in Wall Street’s Dark Pools…