[cube13]

Broadly speaking, there are two ways of increasing your net income(which, at the end of the day, is what investors care about): Increase your margins by charging more or spending less, or increasing your revenue by servicing new markets. In either case, the end result for the investors in the same. In the first case, they get a bigger piece of the pie. In the second, the pie is bigger, which means that their percentage is worth more.

Amazon's entire business model is currently focused on growth through new markets. Here, the idea is that you spend money to make more money in the future. The problem, from an investment perspective, isn't that Amazon's been successful at doing that. Their revenue shows that they've been wildly so. The real problem is that their net income has not been increasing at all (http://ycharts.com/companies/AMZN/net_income ). Since their costs currently aren't scaling well with revenue, it might become a major issue in the future for Amazon's investors.

The market has given Bezos 15 years so far, and to his credit, he's done an outstanding job. Revenue growth has been pretty good for the company, and they're pretty stable. He's managed expectations better than just about any CEO out there, since he's completely open about how his plan is to spend money now to make more money in the future. The market has been fine with that, so far. But there will be a point where the investors will want their investment in Amazon to give a decent return. The question is when that's going to happen, and whether or not Amazon can get all their ducks in a row before it finally does.

[greedo]

I agree with what Bezos has been saying and doing, but the main gist of the argument against Amazon is that investors seem to be expecting Amazon to bump prices and margins at some point, completely the opposite of what Bezos has been saying and doing. Perhaps he means what he says, and simply wants to be like a grocery store making 1-2% margins. Now when your revenue is $100 billion a year, that's not a lot of meat to justify high P/E ratios. And just like Apple is experiencing now with having huge revenue rates, eventually your growth will have to taper off.