Amazon's $1.6 Billion Quarterly Profit Does Not Justify Its $780 Billion Market Cap

Kevin Roose had a piece in the NYT about the large number of tech companies that are going public without ever having made a profit. As the piece points out, the strategy is to use low prices to build up a large market niche and then jack up prices once people become dependent on the company.

Roose touts Amazon as a successful model for this strategy:

"Those years of investments paid off, and Amazon is now the second most valuable company in the world, with $1.6 billion in profit last quarte...