Discussion Board 1 Apple and Amazon Essay

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DISCUSSION BOARD 1Discussion Board 1There are a number of reasons that could be floated in an attempt to explain why Apple’s stock happens to be priced only slightly higher than Amazon’s stock – despite the former’s market capitalization being twice as large as that of the latter. Ordinarily, one would expect Apple’s stock to trade at a significantly higher price than that of Amazon as a consequence of the big difference in the market capitalizations of the two companies. To begin with, the price could be impacted by the fact that Apple has more shares outstanding than Amazon. Secondly, the differences in the price of the two company’s shares could also be as a consequence of demand and supply factors. The demand for Amazon’s stock could be high as a consequence of a wide range of factors shaping or influencing investor expectations.In my opinion, and based on my reading of the relevant materials, investors are willing to pay buy Amazon stock despite Amazon’s capitalization being significantly lower than that of Apple due to their expectations about the future performance of the two companies. For instance, with regard to expected growth in earnings base, it is likely that investors expect the earnings base of Amazon - despite its significantly lower market capitalization in comparison to Apple – to experience enhanced growth going into the future.

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…long-term) than the other. In so doing, I would deploy the debt ratio which, according to Berk, DeMarzo and Harford (2021) is computed by dividing total debt with total equity. The lower debt ratio in the case of Apple is an indication that the company is less leveraged than Amazon – and hence less risky in as far as overall debt burden is concerned. This is an important consideration in my case owing to the fact that we face uncertain economic times as a consequence of the COVID-19 pandemic and the ongoing war between Russia and Ukraine. Thus, in the final analysis, on the strength of my analysis of both companies’ profit generating capabilities and financial….....

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