Amazon Issuing Bonds Because Hey Why Not

Just when I thought the relentless juggernaut of high stock prices absent profits that is Amazon couldn’t get any better, they go and tap bond markets for no real reason:

The world’s largest online retailer by sales was seeking to issue at least $500m in debt, according to a regulatory filing. But bankers familiar with the sale said the offering might exceed $2bn. […]

Its investments contributed to an operating loss of $28m in the three months to the end of September, but its vanishing profits have not reduced the enthusiasm of many equity investors. […]

“What it really does is increase their ability to do an acquisition if they so choose,” he said.

Jeff Bezos is basically a hero of capitalism. Wall Street is willing to give his company a high valuation despite a lack of profits, and he’s determined to power forward on that basis. Borrowing money is extraordinarily cheap right now, so he’s decided to go borrow some money. Thanks to the generally weak economy, it’s a favorable time to invest so he’s going to invest. If everybody thought this way—including the US government, which can borrow most cheaply of all—we’d probably have unemployment licked within the year. But they don’t.

This is, however, the kind of thinking that absolutely makes Amazon the most terrifying competitor in the world. Apple and Microsoft and Walmart are all out there with their petty profit margins and self-financed investments and regular PE ratios trying to grind out wins. Amazon is off the leash, not playing by normal rules, but getting away with it.