<instructions>Your goal is to analyze the following comment and estimate how highly it will be upvoted by the Hacker News community.</instructions><comment><author>_delirium</author><text>Sure, but there are many ways to get future cash flows. A significant difference in the valuation of the two companies is that with Wal-mart, the expectation of future cash flows (and therefore present value) comes primarily from its present size, the cash flows that brings, and its expected ability to continue bringing in such flows. Whereas with Amazon, which has much lower current market share and cash flow, the market is &amp;quot;saying that Amazon&amp;#x27;s growth prospects outweigh it relatively smaller size&amp;quot;. Hence the proportion of expected future cash flows that investors expect to come in the form of future growth is significantly higher with Amazon than with Wal-Mart. Therefore you would expect Amazon to have a lower current size and current headcount per unit present valuation, even if there were no differences in productivity.&lt;p&gt;What I was criticizing was just using the ratio of present market cap and present headcount as a meaningful metric, when comparing companies with very different growth expectations. That effectively becomes a restatement of the different growth expectations: Amazon has the same market cap as Wal-Mart but its present size is smaller in almost any way you could count present size (sales, headcount, etc.).</text><parent_chain><item><author>crabasa</author><text>There is only &lt;i&gt;one&lt;/i&gt; thing being valued by a rational investor: net present value of future cash flows.&lt;p&gt;Edit:&lt;p&gt;The only point I&amp;#x27;m trying to make is that an investor, when they exchange money for a stock, is placing a bet on a single outcome: &lt;i&gt;future cash flows&lt;/i&gt;. Of course there are plenty of ways to get those cash flows, but I find that most people get caught up in details like employee headcount and fail to grasp the single most important factor: &lt;i&gt;compound growth&lt;/i&gt;.</text></item><item><author>chronic40</author><text>Different things are being valued. You simply pointed out they are using the same metric.</text></item><item><author>crabasa</author><text>&amp;gt; That difference is partly due to different things being valued&lt;p&gt;This is misleading. All valuations are based on the discounted value of future cash flows. There are three variables at work here: today&amp;#x27;s cash flows, the growth rate of these cash flows and the discount rate. The market is simply saying that Amazon&amp;#x27;s growth prospects outweigh it relatively smaller size.</text></item><item><author>_delirium</author><text>That difference is partly due to different things being valued: Walmart&amp;#x27;s valuation is primarily its &lt;i&gt;current&lt;/i&gt; business, while Amazon&amp;#x27;s valuation is primarily its &lt;i&gt;future growth prospects&lt;/i&gt;. That future growth is valued in the market cap today, but its actual materialization will only take place in the future, so doesn&amp;#x27;t show up on the payroll today. If Amazon does actually succeed in growing to Wal-Mart levels of sales, it will end up with a lot more employees than it currently has, though quite possibly still fewer than Wal-Mart.</text></item><item><author>kumarm</author><text>I am surprised this is not talked about more:&lt;p&gt;Amazon Full Time Employees:	  154,100&lt;p&gt;Walmart Full Time Employees:	2,200,000&lt;p&gt;(Based on Yahoo Finance Company Profile Stats)&lt;p&gt;There is a growing need for Human&amp;#x27;s to work Lesser Hours going forward rather than more Hours.</text></item></parent_chain></comment><story><title>Amazon Is Now Worth More Than Wal-Mart</title><url>http://blogs.wsj.com/digits/2015/07/24/amazon-now-worth-more-than-wal-mart/?mod=ST1</url></story>
<instructions>Your goal is to analyze the following comment and estimate how highly it will be upvoted by the Hacker News community.</instructions><comment><author>parasubvert</author><text>Arguably the majority of investment is not rational, but speculative.</text><parent_chain><item><author>crabasa</author><text>There is only &lt;i&gt;one&lt;/i&gt; thing being valued by a rational investor: net present value of future cash flows.&lt;p&gt;Edit:&lt;p&gt;The only point I&amp;#x27;m trying to make is that an investor, when they exchange money for a stock, is placing a bet on a single outcome: &lt;i&gt;future cash flows&lt;/i&gt;. Of course there are plenty of ways to get those cash flows, but I find that most people get caught up in details like employee headcount and fail to grasp the single most important factor: &lt;i&gt;compound growth&lt;/i&gt;.</text></item><item><author>chronic40</author><text>Different things are being valued. You simply pointed out they are using the same metric.</text></item><item><author>crabasa</author><text>&amp;gt; That difference is partly due to different things being valued&lt;p&gt;This is misleading. All valuations are based on the discounted value of future cash flows. There are three variables at work here: today&amp;#x27;s cash flows, the growth rate of these cash flows and the discount rate. The market is simply saying that Amazon&amp;#x27;s growth prospects outweigh it relatively smaller size.</text></item><item><author>_delirium</author><text>That difference is partly due to different things being valued: Walmart&amp;#x27;s valuation is primarily its &lt;i&gt;current&lt;/i&gt; business, while Amazon&amp;#x27;s valuation is primarily its &lt;i&gt;future growth prospects&lt;/i&gt;. That future growth is valued in the market cap today, but its actual materialization will only take place in the future, so doesn&amp;#x27;t show up on the payroll today. If Amazon does actually succeed in growing to Wal-Mart levels of sales, it will end up with a lot more employees than it currently has, though quite possibly still fewer than Wal-Mart.</text></item><item><author>kumarm</author><text>I am surprised this is not talked about more:&lt;p&gt;Amazon Full Time Employees:	  154,100&lt;p&gt;Walmart Full Time Employees:	2,200,000&lt;p&gt;(Based on Yahoo Finance Company Profile Stats)&lt;p&gt;There is a growing need for Human&amp;#x27;s to work Lesser Hours going forward rather than more Hours.</text></item></parent_chain></comment><story><title>Amazon Is Now Worth More Than Wal-Mart</title><url>http://blogs.wsj.com/digits/2015/07/24/amazon-now-worth-more-than-wal-mart/?mod=ST1</url></story>