[Mikeb85]

Not if Amazon decides to use some of it's free cash to buy back shares...

Share buybacks and dividends are the end game for all public companies. Profits don't mean anything if money isn't being returned to shareholders.

Amazon's generous valuation means that long-term investors think they'll continue to grow, and someday they'll return money to shareholders...

[cperciva]

If they never make a profit, how do they obtain the cash to spend on buying back shares?

[Mikeb85]

Their businesses are profitable, they just aren't booking profits. Odds are eventually they'll simply use free cash to buy back shares instead of reinvesting it. Which is why Amazon attracts quite a few very sophisticated long-term investors, and why they command a relatively high valuation.

[abalashov]

Well, it's possible to have free cash without being profitable on paper. For instance, remember that depreciation is a major expense for capitalised assets (such as fulfillment centres, data centres, computer equipment, real estate, etc.) but isn't actually a hard cash expense, just a formal expense. The hard cash expense came at the time that the investment was made, i.e. when the data centre or what have you was actually bought and paid for.

So, the difference between that "virtual" expense and actual cash is one accounting category that free cash can come from. There are others.

[cperciva]

Yes, but in the long run if you're depreciating assets and don't have capital costs to buy new assets, you end up running out of assets.