Later in that same letter Buffett adds that…
“Occasionally, though, even very conservative estimates about the future…reveal that the price quoted is startlingly low in relation to value.”
What Amazon’s done as a business is also impressive in many ways. It’s not hard to understand why so many think highly of the company and its future prospects. Yet, I will always find figuring out the valuation of the company — even within a very wide range — to be incredibly difficult.*
Some investors are willing to pay a huge premiums for the possibility that significantly higher earnings power will someday materialize. Some of those same investors will quickly lose interest once there is a lack of exciting growth prospects.
(Even if real persistent earnings is actually, after a long wait, now finally being demonstrated. So literally willing to pay more for the promise of future cash flow than when it actually materializes.)