Sep 4, 2018

Amazon's unstoppable stock

Illustration: Rebecca Zisser/Axios

What's worth more — a company that sells $250 billion of stuff every year at a profit margin of 22%, or a company that sells $200 billion of stuff every year at a profit margin of 3%?

The answer: It's surprisingly close. Both Apple and Amazon now have a stock-market valuation of $1 trillion. The Apple valuation makes a lot of sense: If anything, the iPhone maker is undervalued by the standards of the stock market as a whole. But Amazon is another story entirely: each dollar of profit it makes is valued by the market at an eye-popping $208.

The bottom line: It's almost impossible to justify a $1 trillion valuation if you're trying to get there the old-fashioned way, by looking at the present value of future cashflows. And it's certainly impossible to justify it by looking at Amazon's takeover value, since no one on earth is big enough to buy it.

What's next? The $1 trillion milestone is a real one, and now that Amazon has broken it, the sky's the limit for its stock, which Morgan Stanley sees rising another 25% to $2,500 per share. In today's winner-takes-all economy, big companies can grow faster than startups, and valuations are merely psychological obstacles on the road to ever-higher share prices. Never mind the cashflows, just look at all the wealth being created.

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Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 2:30 p.m. ET: 826,222 — Total deaths: 40,708 — Total recoveries: 174,115.
  2. U.S.: Leads the world in confirmed cases. Total confirmed cases as of 2:30 p.m. ET: 174,467 — Total deaths: 3,416— Total recoveries: 6,000.
  3. Public health updates: Older adults and people with other health conditions are more at risk, new data shows — FDA authorizes two-minute antibody test kit to detect coronavirus.
  4. Federal government latest: NIAID director Anthony Fauci said the White House coronavirus task force will hold an "active discussion" about broadening the use of medical masks to protect against coronavirus.
  5. In Congress: New York Rep. Max Rose deploys to National Guard to help coronavirus response.
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  7. What should I do? Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

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U.S. coronavirus updates: White House studies models projecting virus peak

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios

The White House and other institutions are observing several models to better understand and prepare cities for when the coronavirus is expected to peak in the U.S.

The state of play: The coronavirus is expected to peak in the U.S. in two weeks, but many states like Virginia and Maryland will see their individual peaks well after that, according to a model by the University of Washington's Institute for Health Metrics and Evaluation.

Go deeperArrowUpdated 31 mins ago - Health

FDA authorizes two-minute antibody testing kit to detect coronavirus

Currently, testing kits take days to produce results. Photo: Sergei Malgavko\TASS via Getty Images

The Food and Drug Administration issued an emergency approval Tuesday for a serological testing kit produced by Bodysphere Inc. that can detect a positive or negative result for COVID-19 in two minutes.

Why it matters: Access to testing has improved in the U.S. thanks to commercial labs, but the average wait time for a patient's results is four to five days — with some reports of it taking more than a week.

Go deeperArrowUpdated 41 mins ago - Health