Is Amazon Running Out of Reinvestment Options?
Amazon's (NASDAQ: AMZN) profitability is on the rise. The company's second quarter showed significant profit margin improvements despite enormous one-time costs. So is Amazon running out of reinvestment opportunities that would keep a lid on its profit margins?
Amazon is notorious for reporting relatively low profit margins. For a long time, the company was even mocked for being a "nonprofit." In 2013, journalist Matthew Yglesias famously wrote that Amazon is "a charitable organization being run by elements of the investment community for the benefit of consumers."
This was always a misunderstanding, of course. Amazon has always been interested in being profitable and generating cash over the long term. It's just that it's always had the good fortune of having a culture that prioritized reinvesting today to maximize its future cash flows.
Source Fool.com
