The consistency of Amazon’s revenue growth is amazing

By May 3, 2016Amazon

Amazon just posted strong Q1 results and investors sent their share price up 11%. If you’ve been reading this blog for some time you will know I’m a huge admirer of the way Jeff Bezos has built his business. One of his mantras has been to re-invest profits to drive growth and the growth he has achieved is remarkable for it’s consistency over the last ten years. As you can see from the chart below Amazon has delivered on the proverbial hockey stick that startups put in their business plans, and they’ve done it at serious scale.

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One unfortunate side effect of prioritising growth over profits is that it’s never been totally clear whether Amazon could make profits if it wanted to. Believers believed they could, and sceptics sold their stock. What’s new is that in the last couple of quarters Amazon has posted record profits. That could be because they have run out of good investment options, or it could be, as Benedict Evans speculated, that Bezos wanted the increase in share price that profits would bring so that his employees’ options are worth more.

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