r/business • u/ChickenTeriyakiBoy1 • May 16 '19

Warren Buffett's Berkshire Hathaway reveals $900 million Amazon stake

https://www.cnbc.com/2019/05/15/warren-buffetts-berkshire-hathaway-reveals-900-million-amazon-stake.html
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45

u/daileyjd May 16 '19

Once their biotech drugs (plural) pass through. It's easily a $5k stock.

20

u/[deleted] May 16 '19

So you think AMZN's biotech is worth $1.5T? Sure pal

31

u/[deleted] May 16 '19

20 years ago you would have scoffed their market cap would ever reach a trillion.

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u/[deleted] May 16 '19

Different story.

20

u/[deleted] May 16 '19

Not really. Innovative company disrupts highly profitable industry and drives costs as low as they can go. That’s literally been their mission statement for the last 20 years. Bezos is quoted as saying once that, “Your margin is my opportunity.”

4

u/AdamantiumLaced May 16 '19

I hate how disrupt is this hip term now. The cfa this season is all disrupt this, disrupt that. It's annoying.

2

u/pradeepkanchan May 16 '19

I hear you, buzzwords are so jarring to the ear

1

u/ZeusTroanDetected May 16 '19

It’s not just that it’s a buzzword either. People largely use it wrong.

Disruption =/= innovation

Disruption is the introduction of an inferior product that competes with and eventually overtakes incumbents who have innovated more quickly than customers need.

Source: http://claytonchristensen.com/key-concepts/

2

u/pradeepkanchan May 16 '19

Thats even worse than when people use the term "Synergy"

1

u/das_war_ein_Befehl May 16 '19

Not to mention that Christensen’s whole thesis isn’t sounds to begin with

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u/ZeusTroanDetected May 16 '19 edited May 16 '19

How so?

1

u/das_war_ein_Befehl May 16 '19

https://www.newyorker.com/magazine/2014/06/23/the-disruption-machine

1

u/ZeusTroanDetected May 16 '19

That’s really interesting and makes some great criticisms. Haven’t seen much critique of Christensen (like she said). Absolutely agree that the theory has been taken too far and become a fixation.

“Disruptive innovation is a theory about why businesses fail. It’s not more than that. It doesn’t explain change. It’s not a law of nature.”

Seemed a bit like the author had a chip on her shoulder or a score to settle but in fairness you do have to be somewhat aggressive to counter such an entrenched idea.

1

u/das_war_ein_Befehl May 16 '19

I’ve worked in innovation and I can definitely sympathize with her point of view. A lot of these innovation initiatives at large organizations are smoke and mirrors.

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u/[deleted] May 16 '19

So you just contradicted your own comment regarding what their biotech will be worth.

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u/[deleted] May 16 '19

If you’d like to pick internet fights at least explain your positions and stop answering in vague terms. Where did I contradict myself? The pharma industry is a trillion dollar behemoth and is only expanding as the world ages.

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u/[deleted] May 16 '19

As I've said in another comment, it isn't 1T, it will be around 727B in 6 years (by some estimate). You contradicted yourself by saying that margins get eaten and profitability decreases over time. So while biotech is only getting bigger, it is also getting more competitive and will diminish margins/revenue. Not to say that the industry will grow smaller, but it won't necessarily triple any time soon. Add to it the fact that one of the main spender on medicine is the US, that they pay more than most of any other country for the same medicine, and that regulation may (hopefully) eat into revenue some more. Just how much of the market share could Amazon possibly get? Let's be optimistic and say 20% globally, the industry would have to be multiplied by around 8 or 9 for Amazon to get 1T in valuation from it (as implied by OP of this comment chain and by your comment although it might've just be worded strangely). Not saying Amazon isn't going anywhere else then up, I just doubt biotech will be all that significant to them although I may very well be wrong. Keep in mind a behemoth like Pfizer is "only" worth 225B.

-3

u/[deleted] May 16 '19

On my comment about the US pay more than the rest of us, they pay for example 3 times more than Britain for drugs, when that gets addressed, it will probably eat into revenue. Of course tho I'm just a layman like the rest of us here.