Netflix, Facebook and Amazon are each up 60% in the first 11 months of the year. Apple, is up 50%. Google, the laggard, is up just 34%. These five stocks have added over $900 billion in market capitalization in the first eleven months of the year.
Their performance owes at least in part to their immense power in the marketplace, which has had spillover effects. Over at Enterprising Investor, I took a look at Amazon as a case in point of what this means for the broader competitive and capital allocation environments. Here is an excerpt:
Sentieo shows 770 mentions of Amazon in SEC filings from 439 different companies in just the last three months, more than the president of the United States. Alex Lykken, writing for PitchBook, notes that Amazon competes directly with companies ranging from Ticketmaster to Banana Republic to IBM.Lina M. Khan observes that Amazon’s influence is not easy to calculate “if we measure competition primarily through price and output,” the traditional way regulators have evaluated monopoly. Her 24,000-word essay was published before the company bought Whole Foods, and before CVS initiated a $66-billion buyout of Aetna that has been seen as “defense against Amazon’s potential entry into the pharmacy space.”
What’s confounding is that bullish investors are the quickest to use “the M word.” Chamath Palihapitiya began his pitch at the 2016 Sohn Investment Conference with “We believe there is a multi-trillion dollar monopoly hiding in plain sight.”
You can read the whole thing here.