Amazon ‘terrifies me as a company,’ says a valuation professor

Amazon continues to break records. On Thursday, the company reported earnings per share of $5.07 compared with $2.50 as expected by Thomson Reuters.

But Aswath Damodaran, a professor of corporate finance and valuation at the Stern School of Business at New York University, who is sometimes referred to as the “Dean of Valuation,” said this is not all good news.

“Amazon terrifies me as a company,” Damodaran told CNBC on “Fast Money” Thursday.

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“You find it overvalued but you cannot bet against it because this is a disruption machine,” he said. “I’m not even sure what business the company is in anymore. It’s a platform that can be used pretty much to disrupt any business. And that’s what’s being priced in.”

Amazon’s total revenue, which includes sales from Whole Foods, increased 39 percent year-over-year. Its North America revenue jumped 44 percent to $32.1 billion, while international sales grew 27 percent to $14.6 billion. The company’s cloud business grew nearly 49 percent year-over-year, with Amazon Web Services generating $6.11 billion in revenue.

Amazon recently moved into the health care space by acquiring PillPack.

Shares of the e-commerce giant closed about 3 percent down, but soared more than 4 percent during Thursday after hours trading.

Amazon could not immediately be reached for a comment.

Meanwhile, other FANG (Facebook, Amazon, Netflix and Google) tech giants fell on Thursday.

Facebook missed projections on revenue and daily active users during the quarter, which caused the stock to fall more than 24 percent after the report. The trouble continued on Thursday as shares fell as much as 19 percent. Global daily active users rose to 1.47 billion, up from 1.45 billion. Still, the platform lost users in Europe, and active users in North America were flat.

“After one of the worst quarters, in terms of PR, that a company’s had, I was surprised that the user numbers actually went up,” Damodaran said.

“After April, the market seemed to have forgotten all about the privacy scandal and gone back to business as usual. And I think they got a surprise yesterday that they deserve,” he added.

He felt that a better measure of the company’s success is the number of hours people spend on Facebook, but said that those numbers were still unknown.

Still, he said the stock is undervalued, and right now is a good time to buy with share prices down to around $180.

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