AMZN - Amazon.com Inc.

[Spekulatius]

https://www.ft.com/content/fdef43d2-8988-4694-8357-f7abe02f1c80

 

the kicker:

 

"

The news that Jeff Bezos would step aside as Amazon’s chief executive was a surprise, but there were signs it may have been on his mind for some time.

 

“He was very admiring of the Microsoft succession process,” said Jeffrey Sonnenfeld, professor of leadership at the Yale School of Management, recalling a conversation he had with the Amazon founder way back in 2007.

 

He said he had tried and failed to get Mr Bezos to discuss his own succession plans in a live event. “I think he didn’t want to tip his hand, or suggest there was any kind of internal horse race.”

 

But more than a decade later, Mr Bezos is indeed following the Microsoft model. In the third quarter, he will switch — as Bill Gates did — from day-to-day running to a position of broader strategic leadership."

 

adesigar wins.

 

He  has got many things to take care off, Blue Origin, likely philantrophy, a new squeeze (Sanchez). Should be enough to keep him busy. I also think this was planned and probably even delayed by COVID-19.

[LC]

https://paydayreport.com/amazon-offers-2000-resignation-bonuses-to-bust-union-drive/

 

In violation of Amazon’s social distancing policy, Amazon has forced workers to attend anti-union meetings and sent workers constant text messages daily, hinting that a union could possibly lead to the warehouse closing. Amazon has even gotten the local authorities to shorten the time of stoplights outside of the plant so that union organizers can’t hand out pro-union literature to workers passing in their cars.

 

Now, Amazon is doing something that labor observers have never seen before in a union election; they are offering $2,000 “resignation bonuses” to quit.

 

[rkbabang]

It looks like Amazon has changed its Hitler icon.  Yes, the world has officially gone insane.

https://nypost.com/2021/03/02/amazon-tweaks-app-icon-after-comparisons-made-to-hitler/

 

[Spekulatius]

It looks like Amazon has changed its Hitler icon.  Yes, the world has officially gone insane.

https://nypost.com/2021/03/02/amazon-tweaks-app-icon-after-comparisons-made-to-hitler/

 

I sort of missed this. So the old style icon has now become a digital collectible.

[rkbabang]

It looks like Amazon has changed its Hitler icon.  Yes, the world has officially gone insane.

https://nypost.com/2021/03/02/amazon-tweaks-app-icon-after-comparisons-made-to-hitler/

 

I sort of missed this. So the old style icon has now become a digital collectible.

 

I noticed the new icon, but I failed to see it's resemblance to the Fuhrer.  I guess I didn't remember that Hitler had a little blue wavy mustache.  But in my defense I think most of the pictures I've ever seen of him have been black & white.

 

 

[nickenumbers]

All,

 

Why doesn't Amazon split its share price from 3,110? 

I know the Buffett logic on not splitting the share price, so copy and paste to AMZN.

I know that fractional investing is a thing.

 

But, we know that splitting a share price is also acceptable and common on stock exchanges.  AAPL did one last year or the year before. 

 

Why split the stock?-  I am not hoping for financial alchemy, but I do think it is a nod to the public narrative about "the common person" being able to buy it at $30 or $300, but too high at $3000.  It is optical.

 

Again, I am not trying to get into a debate about stock splits, but are there thoughtful reasons why or why not Bezos hasn't or should split the stock?

[Jurgis]

Most "common people" already can buy AMZN through fractional shares purchases at most brokers...  ::)

[LC]

Most "common people" already can buy AMZN through fractional shares purchases at most brokers...  ::)

Yes but it's a psychological thing. It "feels better" to own 3 shares @ 300/ea rather than 0.3 shares @ 3,000/ea.

[Jurgis]

Most "common people" already can buy AMZN through fractional shares purchases at most brokers...  ::)

Yes but it's a psychological thing. It "feels better" to own 3 shares @ 300/ea rather than 0.3 shares @ 3,000/ea.

 

KK.  8)

 

I'd guess new CEO may split. Who knoews.  ;D

[bizaro86]

Most "common people" already can buy AMZN through fractional shares purchases at most brokers...  ::)

 

Can't buy a fraction of a deeply OTM call option though, as far as I know.

[Spekulatius]

Most "common people" already can buy AMZN through fractional shares purchases at most brokers...  ::)

 

Can't buy a fraction of a deeply OTM call option though, as far as I know.

 

First world problems  ;D.

Does anyone else think that AMZN looks cheap here? Bought a few shares here around $3060.

[cubsfan]

^ Yup , bought AMZN too.

[Fitz]

Most "common people" already can buy AMZN through fractional shares purchases at most brokers...  ::)

 

Can't buy a fraction of a deeply OTM call option though, as far as I know.

 

First world problems  ;D.

Does anyone else think that AMZN looks cheap here? Bought a few shares here around $3060.

 

I don't think it's ever looked cheap! :D

 

But it's growth in revenue and profits are impressive. An argument could easily be made that the CV has permanently altered consumer behaviour and Amazon will capture that business going forward, or I could see a narrative that see's a regression with storefront commerce opening back up and this years earnings being larger than normal.

 

Over time, it's hard to imagine a company that gives back so much of its potential profits to its customers not growing and doing very well.

 

I'm long AMZN but havent added in a while. What have you noticed about the company that makes it cheap today? I'd love to hear!

[cubsfan]

^ Cheap, no, --- Quality at a reasonable price - Cloud biz on fire.

[Jurgis]

Does anyone else think that AMZN looks cheap here? Bought a few shares here around $3060.

 

Depends on the growth rate you assume. If you assume 30% FCF growth for 10 years, then you may get close to 15% annual return. If you assume that FCF is understated because of investments, then this may or may not be reasonable. M* expects 22% growth rate. At that rate, expected return is ~7% annualized.

 

I bought a bunch at $31XX last year. Probably won't buy more due to CEO change. I'm not sure if we are going to get Ballmer or Nadella.  ::)

[dwy000]

Does anyone else think that AMZN looks cheap here? Bought a few shares here around $3060.

 

Depends on the growth rate you assume. If you assume 30% FCF growth for 10 years, then you may get close to 15% annual return. If you assume that FCF is understated because of investments, then this may or may not be reasonable. M* expects 22% growth rate. At that rate, expected return is ~7% annualized.

 

I bought a bunch at $31XX last year. Probably won't buy more due to CEO change. I'm not sure if we are going to get Ballmer or Nadella.  ::)

 

30% for 10 years from this starting point seems....unlikely.  That would be $910bn of OCF in 2030.  Haven't looked up the FCF number but having it compound at 30% for 10 years is a very, very aggressive assumption.  To get a 15% annual return.  Even the 22% seems excessive for 10 years and then you end up with a 7% annualized return. 

[Spekulatius]

This is one of those stocks that actually doesn’t have benefited from multiple expansion like so many other stocks. The share price appreciation , which was considerable, has been “earned” with increasing revenues and earnings and the multiple roughly stayed the same. Most other stocks have benefited from multiple expansion, but not AMZN. This is somewhat surprising to me, but that’s what the numbers show:

[Xerxes]

Thanks

That is really interesting observation, so basically buying today would be like paying the same multiple at around March timeframe.

Share price flat since August on dollar basis.

 

Historically, MSFT and AMZN have had huge earning multiples in contrast to Alphabet and Apple, mostly due to the could business.

It would be fair to say that Alphabet is playing catch-up

[Simba]

Thanks

That is really interesting observation, so basically buying today would be like paying the same multiple at around March timeframe.

Share price flat since August on dollar basis.

 

Historically, MSFT and AMZN have had huge earning multiples in contrast to Alphabet and Apple, mostly due to the could business.

It would be fair to say that Alphabet is playing catch-up

 

Hmm..

 

Couple points just thinking out loud here

 

- Was demand pulled forward?

- Have other companies gotten stronger in Ecommerce? (Shopify, ETSY, EBAY, Nike, LULU, etc.,) making AMZN bull case weaker?

 

still interesting it derated so quickly

[Spekulatius]

Thanks

That is really interesting observation, so basically buying today would be like paying the same multiple at around March timeframe.

Share price flat since August on dollar basis.

 

Historically, MSFT and AMZN have had huge earning multiples in contrast to Alphabet and Apple, mostly due to the could business.

It would be fair to say that Alphabet is playing catch-up

 

GOOG is slower growing than AMZN and that’s where the lower multiple is coming from. They have a better track record expanding in new business - AWS, Advertising, Alexa etc.

 

GOOG has Google bets but those in total do not seem to be well run.

[dwy000]

Thanks

That is really interesting observation, so basically buying today would be like paying the same multiple at around March timeframe.

Share price flat since August on dollar basis.

 

Historically, MSFT and AMZN have had huge earning multiples in contrast to Alphabet and Apple, mostly due to the could business.

It would be fair to say that Alphabet is playing catch-up

 

 

GOOG is slower growing than AMZN and that’s where the lower multiple is coming from. They have a better track record expanding in new business - AWS, Advertising, Alexa etc.

 

GOOG has Google bets but those in total do not seem to be well run.

 

Terry Smith from Fundsmith had an interesting comment on that topic.  He said he wanted to own the Google base business but didn't want all the other stuff.  With Amazon he wants to own all the other stuff but doesn't want to be stuck with the base business.

[Liberty]

Terry Smith from Fundsmith had an interesting comment on that topic.  He said he wanted to own the Google base business but didn't want all the other stuff.  With Amazon he wants to own all the other stuff but doesn't want to be stuck with the base business.

 

The base business is great. Can't believe it's still misunderstood today...

[Xerxes]

Couple points just thinking out loud here

 

- Was demand pulled forward?

- Have other companies gotten stronger in Ecommerce? (Shopify, ETSY, EBAY, Nike, LULU, etc.,) making AMZN bull case weaker?

 

still interesting it derated so quickly

 

I think net-net Amazon benefitted even as its peers got supercharged and were forced to go on-line, mostly due to the fact it the pandemic levelled the playing field somewhat. So from a regulatory point of view, Amazon can say; "look, we are not dominant, look at Nike, Shopify, Chewy etc etc, our offering competes with them"

[Xerxes]

Terry Smith from Fundsmith had an interesting comment on that topic.  He said he wanted to own the Google base business but didn't want all the other stuff.  With Amazon he wants to own all the other stuff but doesn't want to be stuck with the base business.

 

The base business is great. Can't believe it's still misunderstood today...

 

My way of seeing it is that 10 years ago Alphabet was a high-margin search business that started dabbling into low-margin businesses (i.e Waymo etc.) whereas Amazon was a low-margin e-commerce business that started dabbling into high-margin Cloud computing businesses. So the latter had the multiple expansion tailwinds, whereas the former was being lifted in the market but the sum-of-the-parts narrative. Perhaps, Google Cloud and YouTube will remedy that narrative

 

I own both and will continue for years to come. Long-term hold, until, of course, when there is a huge bear market, and i sell them both at the exact bottom in great panic, so that i can feel secure, while in the eye of hurricane.

 

EDIT: fixed typo

[Liberty]

Terry Smith from Fundsmith had an interesting comment on that topic.  He said he wanted to own the Google base business but didn't want all the other stuff.  With Amazon he wants to own all the other stuff but doesn't want to be stuck with the base business.

 

The base business is great. Can't believe it's still misunderstood today...

 

My way of seeing it is that 10 years ago Alphabet was a high-margin search business that started dabbling into low-margin businesses (i.e Waymo etc.) whereas Amazon was a low-margin e-commerce business that started dabbling into low-margin Cloud computing businesses. So the latter had the multiple expansion tailwinds, whereas the former was being lifted in the market but the sum-of-the-parts narrative. Perhaps, Google Cloud and YouTube will remedy that narrative

 

I own both and will continue for years to come. Long-term hold, until, of course, when there is a huge bear market, and i sell them both at the exact bottom in great panic, so that i can feel secure, while in the eye of hurricane.

 

The e-commerce business was great and keeps getting better (Prime subscriptions, 3P and ads on top of 1P). People focus too much on margins, what matters ultimately is ROIC and reinvestment opportunities. A low-margin business that has a strong competitive position, that grows fast organically, has lots of turns of its capital and where you can reinvest lots of capital at high rates is quite good. Just look at Costco.