AMZN - Amazon.com Inc.

[TorontoRaptorsFan]

The secret is to load your wishlist up with books you would like to purchase.

Every 2-3 days check the wishlist pricing. I've bought over 75+ books where original prices were $15+ and got them for $2.99 or less.

 

[mbreject]

And if you don't see "Price set by seller," the price was set by Amazon (unless it's indie.) I know they used to pay the publisher 50% of the list price, but I'm not sure how/if the Apple lawsuit affected this.

[villainx]

Ok, thanks guys, maybe its just my profile. Plenty of example of this happening ongoing but here are specifics which you can try and let me know if you see the same thing:

 

Zen books from Thich Nhat Hanh

 

Compare the Kindle price of "No Mud, No Lotus: The Art of Transforming Suffering" when logged in versus logged out.

 

Same thing happened the other day with "Intelligent Investor" but getting a different result today. Again not the same price but I'm more advantaged today when I log in as opposed to when I'm logged out.

 

 

What's the difference that you are seeing?

 

Logged in and cleared cache not logged in was exactly the same for No Mud.

[fareastwarriors]

Amazon Reveals Some Prime Numbers

https://www.bloomberg.com/gadfly/articles/2017-02-14/amazon-prime-numbers-a-hint-of-the-secret-formula

[JBTC]

Dear Amazon shareholders,

 

Just wondering what you guys make of the idea that it may make sense for Amazon to buy Tripadvisor, whose shares have dropped to a 4-year low. See below some comments on SA -

 

------------------------------------------------

 

I would like to see what others think but I think tripadvisor would be a great asset for Amazon.com to buy. Here are reasons why

 

1) We need slew of services that are available to members of Amazon prime and i need a reason to keep that. If amazon can buy tripadvisor and can negotiate special rates with the hotels and have special travel deals for prime members, the cost of my membership would be truly worthwhile ( it costs only 100$ and if a prime deal gets me a cheaper hotel or car rental, I am all for it) - Its a huge incentive to keep my prime membership

2) When i want to research any product i buy, i go to amazon. Similarly when i try to research on a trip, I go to tripadvisor. Combining the strengths of the two with massive user base would be an easy target for tripadvisor growth - and a good profitable business for amazon.

3) When i buy a trip, amazon has the relevance engine to upsell massive amount of goods and products that would pertain my trip ( imagine i book for a trip to Paris) and moment amazon knows that they can start selling me things based on what i would need for a trip. huge upsell for relevance engine

etc etc

 

To add few more details

 

1) TripAdvisor would benefit from Amazon tech stack

2) Tripadvisor would benefit from amazon customer base and immediately turnaround on IB

3) Amazon will have a travel platform versus google hotel finder

4) Hotels need a strong support from non OTA to reduce reliance on Google, Priceline and expedia ( Its a win for hotels to reduce their fee structure)

5) Amazon will have a profitable cross selling platform with good margin travel business

6) PCLN rules europe and expedia rules US , Amazon has an opportunity to take it to an absolute global scale than no-one else

7) They can just start with taking the TRIP/Maffei share alone to start making money on this.

8) Amzn can use their high stock price to buy a depressed asset

9) Amzn can bring to scale the tripadvisor advertising/referral revenue stream as well.

10) Finally - It would be a huge win for Amazon Payments business to scale ( and all those credit cards on amazon to make those travel purchases )if trip if bought.

 

[SlowAppreciation]

Want to stir the pot here a bit...I used to believe that Amazon was grossly overvalued because they don't make a profit, but I'm starting to change my mind. While it still looks overvalued, I'm not sure it's as bad as it looks.

 

For one, Amazon requires surprisingly little capital to operate. In some ways, the business runs free—minimal working capital and minimal net operating assets, negative cash conversion cycle, etc. Sales growth outpaces capital growth, and the spread stands to accelerate as operating leverage ramps up.

 

But even if capital is increasing at a slower rate than that of the top line, isn't value being destroyed if that capital isn't generating any income? This brings me to point #2:

 

It took me a while to come around to this, but you don't need reported profits to create value (just ask John Malone). Instead, Bezos goes for FCF, and there are plenty of reasons for him to do so (e.g., lower taxes). After removing capital lease payments from the published FCF figure, you're at ~$6b in FCF.

 

$6b on a $400b valuation still seems rich, but don't forget that you have a business mostly funded by suppliers and upfront customer subscription payments (Prime), that requires ~$20b of capital, does $6b annual FCF, grows at 30%, is run by the best CEO alive, and has—even today— perhaps the biggest runway/TAM in the history of business.

 

I may not be sure what that business is precisely worth, but it's probably not too far off from $400b.

[LongTermView]

After removing capital lease payments from the published FCF figure, you're at ~$6b in FCF.

When looking at the economic value of the fcf, the $1.5b in stock-based compensation is a consideration that deserves mention imo.

 

[abyli]

Want to stir the pot here a bit...I used to believe that Amazon was grossly overvalued because they don't make a profit, but I'm starting to change my mind. While it still looks overvalued, I'm not sure it's as bad as it looks.

 

For one, Amazon requires surprisingly little capital to operate. In some ways, the business runs free—minimal working capital and minimal net operating assets, negative cash conversion cycle, etc. Sales growth outpaces capital growth, and the spread stands to accelerate as operating leverage ramps up.

 

But even if capital is increasing at a slower rate than that of the top line, isn't value being destroyed if that capital isn't generating any income? This brings me to point #2:

 

It took me a while to come around to this, but you don't need reported profits to create value (just ask John Malone). Instead, Bezos goes for FCF, and there are plenty of reasons for him to do so (e.g., lower taxes). After removing capital lease payments from the published FCF figure, you're at ~$6b in FCF.

 

$6b on a $400b valuation still seems rich, but don't forget that you have a business mostly funded by suppliers and upfront customer subscription payments (Prime), that requires ~$20b of capital, does $6b annual FCF, grows at 30%, is run by the best CEO alive, and has—even today— perhaps the biggest runway/TAM in the history of business.

 

I may not be sure what that business is precisely worth, but it's probably not too far off from $400b.

 

I think you forgot to mention that half of the $400b is for AWS.

[SlowAppreciation]

Want to stir the pot here a bit...I used to believe that Amazon was grossly overvalued because they don't make a profit, but I'm starting to change my mind. While it still looks overvalued, I'm not sure it's as bad as it looks.

 

For one, Amazon requires surprisingly little capital to operate. In some ways, the business runs free—minimal working capital and minimal net operating assets, negative cash conversion cycle, etc. Sales growth outpaces capital growth, and the spread stands to accelerate as operating leverage ramps up.

 

But even if capital is increasing at a slower rate than that of the top line, isn't value being destroyed if that capital isn't generating any income? This brings me to point #2:

 

It took me a while to come around to this, but you don't need reported profits to create value (just ask John Malone). Instead, Bezos goes for FCF, and there are plenty of reasons for him to do so (e.g., lower taxes). After removing capital lease payments from the published FCF figure, you're at ~$6b in FCF.

 

$6b on a $400b valuation still seems rich, but don't forget that you have a business mostly funded by suppliers and upfront customer subscription payments (Prime), that requires ~$20b of capital, does $6b annual FCF, grows at 30%, is run by the best CEO alive, and has—even today— perhaps the biggest runway/TAM in the history of business.

 

I may not be sure what that business is precisely worth, but it's probably not too far off from $400b.

 

I think you forgot to mention that half of the $400b is for AWS.

 

Not sure I follow?

[SlowAppreciation]

After removing capital lease payments from the published FCF figure, you're at ~$6b in FCF.

When looking at the economic value of the fcf, the $1.5b in stock-based compensation is a consideration that deserves mention imo.

 

Agreed.

 

One thing worth mentioning is that Amazon's SBC is structured differently than most companies. Traditionally in the tech industry, SBC vests equally over 4 years. Amazon on the other hand backweights it. So instead of 25% each year, they do something like 5% in yr 1, 15% in yr 2, and 40% in years 3&4. Further, I believe turnover is higher at Amazon than other tech companies (avg tenure ~1.5-2yrs?), so I think there's some money being left on the table in terms of SBC.

 

I'm not sure how this would impact the financial statements (if at all), but thought it's interesting to note.

[Liberty]

Good piece on how Amazon is courting CPG companies:

 

https://www.bloomberg.com/news/articles/2017-03-30/amazon-wants-cheerios-oreos-and-other-brands-to-bypass-wal-mart

 

We tend to forget how much these products are designed for brick & mortar retail... If they can get them to focus more on online, it could be a big coup.

[DooDiligence]

Good piece on how Amazon is courting CPG companies:

 

https://www.bloomberg.com/news/articles/2017-03-30/amazon-wants-cheerios-oreos-and-other-brands-to-bypass-wal-mart

 

We tend to forget how much these products are designed for brick & mortar retail... If they can get them to focus more on online, it could be a big coup.

 

When I read this I'd just opened a new plastic can of Crystal Lite with 5 packets in it & thought the packaging a bit ridiculous (Amazon would force them to slim it down which would be a good thing...)

 

I definitely think CGM's should start filling this channel but I still don't see it stopping people who love to shop B & M with a gigantic buggy.

 

and um Jet.com

[ScottHall]

Good piece on how Amazon is courting CPG companies:

 

https://www.bloomberg.com/news/articles/2017-03-30/amazon-wants-cheerios-oreos-and-other-brands-to-bypass-wal-mart

 

We tend to forget how much these products are designed for brick & mortar retail... If they can get them to focus more on online, it could be a big coup.

 

When I read this I'd just opened a new plastic can of Crystal Lite with 5 packets in it & thought the packaging a bit ridiculous (Amazon would force them to slim it down which would be a good thing...)

 

I definitely think CGM's should start filling this channel but I still don't see it stopping people who love to shop B & M with a gigantic buggy.

 

and um Jet.com

 

;D

 

[Guest longinvestor]

AMZN worth 2x WMT

 

http://money.cnn.com/2017/04/04/investing/amazon-stock-900-alltime-high/

 

[Jurgis]

It seems there's a huge Amazon purchase wallet access war going on in credit card land. I have the Chase Amazon Visa giving 5% back. Then Amex is giving new credit card holders 10% back from Amazon purchases for first 6 months. Then Fido Visa just sent me offer of $25 back if I make three Amazon purchases over $25. (Not mentioning Discover and Chase Freedom that periodically now run 5% back from Amazon in their categories).

 

My guess is CC companies are just drooling to be the card used in Amazon purchases... Cause do you even spend money elsewhere?  8)

[rkbabang]

It seems there's a huge Amazon purchase wallet access war going on in credit card land. I have the Chase Amazon Visa giving 5% back. Then Amex is giving new credit card holders 10% back from Amazon purchases for first 6 months. Then Fido Visa just sent me offer of $25 back if I make three Amazon purchases over $25. (Not mentioning Discover and Chase Freedom that periodically now run 5% back from Amazon in their categories).

 

My guess is CC companies are just drooling to be the card used in Amazon purchases... Cause do you even spend money elsewhere?  8)

 

I got the same Fidelity VISA email.  I immediately did 3 separate $25 gift card transactions, emailing the gift cards to myself.  I'm still going to use my 5% cash back Amazon card at Amazon though.

 

[Jurgis]

Update on AMZN vs Walmart from the rare groceries POV. I buy specific brand of whole bean coffee for family. Amazon had that at ~$9 per 12oz pack. Walmart online had it at store prices ~$7. Now Walmart has it only at ~$15. Amazon back to being cheaper...

 

Local stores might stock it at $7 or not...

 

#firstworldproblemswithrarebrands

[Travis Wiedower]

Bezos' annual letter was published this week (attached). Always a good read.

2016_Letter_to_Shareholders.pdf

[Parsad]

It seems there's a huge Amazon purchase wallet access war going on in credit card land. I have the Chase Amazon Visa giving 5% back. Then Amex is giving new credit card holders 10% back from Amazon purchases for first 6 months. Then Fido Visa just sent me offer of $25 back if I make three Amazon purchases over $25. (Not mentioning Discover and Chase Freedom that periodically now run 5% back from Amazon in their categories).

 

My guess is CC companies are just drooling to be the card used in Amazon purchases... Cause do you even spend money elsewhere?  8)

 

That's the funny thing, I still rarely buy stuff from Amazon...maybe 2-3 times a year.  Yet, I know people who shop there weekly, if not almost daily!  Over time, I'm sure Amazon will get more of my shopping dollars, but for now, I think until they eliminate more of their competition, I won't be buying a whole lot there.  Alot of people are still like me as well!  Amazon is going to have to drive alot more companies out of business before that current P/E makes sense.  Cheers! 

[giofranchi]

Amazon is going to have to drive alot more companies out of business before that current P/E makes sense.  Cheers!

 

I see, Sanjeev.

On the other hand, on a P/S basis AMZN looks attractively priced, given its rate of revenue growth. And according to Morningstar AMZN is undervalued (though not cheap) today.

I have bought some just in case it keeps growing revenue and succeeds in gradually expanding margins too.

 

Cheers,

 

Gio

[glorysk87]

 

That's the funny thing, I still rarely buy stuff from Amazon...maybe 2-3 times a year.  Yet, I know people who shop there weekly, if not almost daily!  Over time, I'm sure Amazon will get more of my shopping dollars, but for now, I think until they eliminate more of their competition, I won't be buying a whole lot there.  Alot of people are still like me as well!  Amazon is going to have to drive alot more companies out of business before that current P/E makes sense.  Cheers!

 

For every one like you, there's someone like me. I buy something on Amazon literally almost every day.

 

I actually went through and mapped my purchasing activity back over the past 5 years and by dollar amount it has MUCH more than doubled every single year.

[PLynchJr]

Same with my family.  Each year Amazon captures more and more of our purchases.

[clutch]

I also buy almost everything from Amazon. There is the convenience, but more importantly, peace of mind. If anything goes wrong, I know Amazon will resolve the issue almost without any friction. I'm willing to pay premium for this (in the form of Prime fee + higher prices for some products).

 

BTW, we should never forget about AWS when discussing Amazon's business or valuation... it will surpass the retail business sooner or later.

 

 

[Guest Schwab711]

Doesn't the retail business depend on AWS?

[TheAiGuy]

Amazon is going to have to drive alot more companies out of business before that current P/E makes sense.  Cheers!

 

I would be shocked if most of their current competitors aren't teetering on the edge in 10 years. Specifically:

 

Target

Best Buy

Macy's

Kohl's

Sears

Staples

Office Depot

Dillard's

Game Stop

 

Are all pretty screwed, and living in a rural area, I think the pressure on Walmart will be substantial. (Walmart is basically the big retailer in rural areas across all SES levels, Amazon attracts higher SES shoppers, which should put a lot of strain on wallmart in rural areas)