It isn't profitable yet, and although many people believe it will eventually be profitable, nobody can reasonably estimate how profitable. Rather than valuation, my main concern involves Amazon's current and lasting sustainable advantages, and in relation to that its potential profit margins. This high margin implies lasting sustainable advantages. If a company does not have sustainable advantages, competitors swoop in and decrease its profitability level, knocking margins into single digits. Amazon is not poised to have large amounts of either.
Retailing is by nature low-margin and highly competitive.
One of the most frequently used weapons in retailing is price, and the lower product pricing falls, the lower profit margins decline. In addition, online price wars are likely to be constant. However, Amazon comes up short on other criteria, too. Finally, it is questionable how many new business opportunities exist for an online retailer that is best known for books and music, and that has tried other things with so-so results. The Internet's traffic is not growing the way that it used to.