HWWProject Posted February 6, 2015 Share Posted February 6, 2015 Good article, describes how Amazon hides massive capex thru lease accounting: http://time.com/money/3697604/amazon-free-cash-flow/?xid=yahoo_money Also mentions they are not able to keep up with investments in Cloud services as Google and Microsoft. Link to comment Share on other sites More sharing options...
AJDelphi Posted March 11, 2015 Share Posted March 11, 2015 Here is a blog post of mine on how Amazon Actually Makes Money. I tried to keep it SIMPLE since most of my readers aren't on COBF. http://delphivalueinvestments.blogspot.com/2015/03/amazon-actually-makes-money-lot-of-it.html Link to comment Share on other sites More sharing options...
philly value Posted March 11, 2015 Share Posted March 11, 2015 Here is a blog post of mine on how Amazon Actually Makes Money. I tried to keep it SIMPLE since most of my readers aren't on COBF. http://delphivalueinvestments.blogspot.com/2015/03/amazon-actually-makes-money-lot-of-it.html I think you can't ignore stock-based compensation, which in 2014 totaled $1.5 billion. Assuming that figure is an accurate representation of the amount of cash Amazon would have had to pay employees in lieu of stock, you are down to $5.3B in cash from operations, and have nearly cut your estimate of free cash flow in half. There's also an issue of acquisitions being included in the capex figure, but you can argue that that falls under growth capex. Link to comment Share on other sites More sharing options...
shalab Posted March 11, 2015 Share Posted March 11, 2015 AMZN fans, have you seen this video? Link to comment Share on other sites More sharing options...
dwy000 Posted March 11, 2015 Share Posted March 11, 2015 Here is a blog post of mine on how Amazon Actually Makes Money. I tried to keep it SIMPLE since most of my readers aren't on COBF. http://delphivalueinvestments.blogspot.com/2015/03/amazon-actually-makes-money-lot-of-it.html I think you can't ignore stock-based compensation, which in 2014 totaled $1.5 billion. Assuming that figure is an accurate representation of the amount of cash Amazon would have had to pay employees in lieu of stock, you are down to $5.3B in cash from operations, and have nearly cut your estimate of free cash flow in half. There's also an issue of acquisitions being included in the capex figure, but you can argue that that falls under growth capex. You also need to adjust for lease payments (which have been used to fund much of the aws and fulfillment center growth). Adjusting for that, free cash flow in 2014 was $529m, down from $1,251m in 2013. Link to comment Share on other sites More sharing options...
Jurgis Posted March 11, 2015 Share Posted March 11, 2015 AMZN fans, have you seen this video? I am not AMZN stock fan, but I am company fan. Pickup at store? What a joke. So now I have to drive and waste time to get an item I ordered online? ::) So who is this joker? Link to comment Share on other sites More sharing options...
AJDelphi Posted March 16, 2015 Share Posted March 16, 2015 Here is a blog post of mine on how Amazon Actually Makes Money. I tried to keep it SIMPLE since most of my readers aren't on COBF. http://delphivalueinvestments.blogspot.com/2015/03/amazon-actually-makes-money-lot-of-it.html I think you can't ignore stock-based compensation, which in 2014 totaled $1.5 billion. Assuming that figure is an accurate representation of the amount of cash Amazon would have had to pay employees in lieu of stock, you are down to $5.3B in cash from operations, and have nearly cut your estimate of free cash flow in half. There's also an issue of acquisitions being included in the capex figure, but you can argue that that falls under growth capex. Philly- Yep of course you are right. I would argue that the true number is less than $1.5 billion because I think the stock is overpriced and I wouldn't buy it unless it were at a lower valuation. Thus the true stock based comp(% of new company shares issued would be the same, price is lower) would be less. Probably around $1 Billion or so. Still significant in my estimate of OE though. And yes I would say acquisitions are most definitely growth capex. Dwy000 Would also need to include that. I must admit I am not exactly sure how to think of the principal repayments in terms of coming up with a good maintenance capex number. I would assume that if Amazon decided to stop growing. Not building new AWS data centers and fulfillment centers, the principal payments number would likely stay close to the $1.42 billion they paid in 2014(might go up a few hundred mil). The principal repayments is why I put the part about making a lot of "rough" assumptions in the post. Link to comment Share on other sites More sharing options...
HWWProject Posted April 17, 2015 Share Posted April 17, 2015 AJDelphi - I agree with your blog post and 'Shalab' - the video linked was excellent, also supports concern that: With their new focus on building regional and local product warehouses, it’s almost like Amazon is becoming Wal-Mart. Before the recent push into many new physical warehouses (say pre-2012), Amazon was growing profitably, able to expand out of retained earnings. Besides the capital cost, these warehouses require maintenance capex expenditures. Perhaps the most significant piece of info is that while revenue has grown +30% per year for many years, depreciation (DDA) has grown hundreds of percent (from $100-200M in early 2000’s to nearly $5 billion currently). Perhaps a larger threat is that Wal-Mart could become Amazon – what’s to prevent Wal-Mart from teaming with Fed-Ex (or hell using drones) and using their stores as a base for speedy home delivery? Wal-Mart knows a thing or two about low prices, and will not stand by and let Amazon take over the retailing world. While Amazon has expanded into other markets (Prime TV, cloud services), there’s plenty of competition there too (Netflix, everyone else is in the cloud). Full post: http://healthywealthywiseproject.com/2015/04/amazon-stock-primed-for-perfection/ Amazon is just too richly priced and facing increased competition from other retailers. Link to comment Share on other sites More sharing options...
rkbabang Posted April 22, 2015 Share Posted April 22, 2015 Meet Amazon’s first customer The online retailing giant even named a building after him Link to comment Share on other sites More sharing options...
rpadebet Posted April 24, 2015 Share Posted April 24, 2015 Its now trading near $440 in pre-market. Up 40%+ in 4 months....I love this efficient market theory..Happened in AAPL, VRX etc...large caps supposedly are more closely followed and scrutinized... Link to comment Share on other sites More sharing options...
dwy000 Posted April 24, 2015 Share Posted April 24, 2015 Congrats to investors riding the momentum. Is it just me or does the Nasdaq hitting all time highs, Venture Capital acting like Masters of the Universe, companies with no profits or plans for profits with monster valuations and adding "cloud" to your press release justifies an immediate jump in your valuation - does it all feel eerily similar to something? Link to comment Share on other sites More sharing options...
rpadebet Posted April 24, 2015 Share Posted April 24, 2015 Congrats to investors riding the momentum. Is it just me or does the Nasdaq hitting all time highs, Venture Capital acting like Masters of the Universe, companies with no profits or plans for profits with monster valuations and adding "cloud" to your press release justifies an immediate jump in your valuation - does it all feel eerily similar to something? haha..thanks. It never got to be a big position for me to be really excited abt it. I was waiting for 270-280 level and it never got there during normal trading hours, so just a small 4-5% position @300 which did well. I am not going to defend the current valuation as "reasonable" any more. Current price means a lot of things have to go exactly as planned with little margin for error. It was at the upper end of cheap at $300 though. And I don't think its pure momentum though, N.A. retail is doing well, growth is good, there is more clarity on NA retail margins now. AWS was expected to be money loser, which it is not. People said and are still saying its a commodity business, that's partially true if you think of "cloud" as "server and storage" rental. AWS is moving beyond that into sticky services. The service, software and API ecosystem they are creating has a potential for a "IBM mainframe" like stickiness. They are losing money in the international business, but the pie is so big and they are just getting started there, so there is potential for similar to NA margins there in a few years. Will see how it plays out from here.... PS: NASDAQ is hitting all time highs after 15 years, cut them some slack, its not been a pretty ride. hitting those levels again doesn't mean its automatically over valued. Link to comment Share on other sites More sharing options...
Liberty Posted April 24, 2015 Share Posted April 24, 2015 PS: NASDAQ is hitting all time highs after 15 years, cut them some slack, its not been a pretty ride. hitting those levels again doesn't mean its automatically over valued. The "all time highs" noise that I keep hearing doesn't make much sense. Over any significant enough period of time, you should expect to be constantly hitting new all time highs because the economy is growing, population is growing, inflation is making the nominal figures bigger, the world is globalizing and poor countries are becoming richer, etc. Look at a chart of the DOW going back a 100 years and tell me how many all time highs have been hit... Link to comment Share on other sites More sharing options...
innerscorecard Posted April 24, 2015 Share Posted April 24, 2015 Not to mention that we haven't hit an inflation-adjusted all-time-high yet. I don't understand why people who purport to be value investors who look at economic reality place so much importance on purely symbolic nominal numbers. Link to comment Share on other sites More sharing options...
dwy000 Posted April 24, 2015 Share Posted April 24, 2015 Easy there people. I wasn't suggesting the Nasdaq was overvalued or undervalued or making any comment on the purported value of anything. I was merely pointing out the deja vu where all the headlines and stories match up. Take that for whatever you will. Link to comment Share on other sites More sharing options...
Liberty Posted April 24, 2015 Share Posted April 24, 2015 Easy there people. I wasn't suggesting the Nasdaq was overvalued or undervalued or making any comment on the purported value of anything. I was merely pointing out the deja vu where all the headlines and stories match up. Take that for whatever you will. What you said made me think of a larger trend that I see everywhere, I wasn't just replying to you, sorry for not making that clear. As for tech, you might find this article interesting: http://stratechery.com/2015/1999/ Link to comment Share on other sites More sharing options...
BargainValueHunter Posted April 24, 2015 Share Posted April 24, 2015 Serious question: Has anybody overheard their dry cleaner or barber or pharmacist or deli guy talking about Amazon or any of the other overvalued tech stocks recently? I haven't so I don't see a crash any time soon. I remember overhearing long haul truck drivers in Kentucky talking excitedly about Yahoo! in '99 and I remember the absolute FRENZY to put down a contract on C level condos in my area in 2005... Link to comment Share on other sites More sharing options...
constructive Posted April 24, 2015 Share Posted April 24, 2015 Serious question: Has anybody overheard their dry cleaner or barber or pharmacist or deli guy talking about Amazon or any of the other overvalued tech stocks recently? I haven't so I don't see a crash any time soon. I remember overhearing long haul truck drivers in Kentucky talking excitedly about Yahoo! in '99 and I remember the absolute FRENZY to put down a contract on C level condos in my area in 2005... I think a lot of people deceive themselves that they can identify bubbles by listening to people make small talk. It is only easy in hindsight. Link to comment Share on other sites More sharing options...
rpadebet Posted April 24, 2015 Share Posted April 24, 2015 I don't know. People around me don't want to talk stocks anymore :(. Maybe I get excited when the topic is stocks, but most "normal" people I meet don't even know we are at new highs these days. They are still thinking the economy sucks, market went up (rich got richer) but will go down soon etc (fox news and cnn stuff). Most people think all this is a bubble and will collapse again...just like it did the last 2 times. Link to comment Share on other sites More sharing options...
fareastwarriors Posted April 24, 2015 Share Posted April 24, 2015 People don't even want to talk real estate with me. I work in SF. Home prices are exploding! Link to comment Share on other sites More sharing options...
rkbabang Posted April 24, 2015 Share Posted April 24, 2015 Serious question: Has anybody overheard their dry cleaner or barber or pharmacist or deli guy talking about Amazon or any of the other overvalued tech stocks recently? I haven't so I don't see a crash any time soon. I remember overhearing long haul truck drivers in Kentucky talking excitedly about Yahoo! in '99 and I remember the absolute FRENZY to put down a contract on C level condos in my area in 2005... I agree, in fact I've had just the opposite experience lately. I talk to people who still won't touch stocks. My neighbor was recently complaining to me that every time he goes to the bank they want to know why he has all his money in his savings account earning almost no interest and they keep trying to get him to talk to an investment adviser. He isn't having any of it, he says he knows his money is safe where it is and that's that. Real estate on the other hand seems hot in the Boston area though (I'm in NH a little over 50 miles north of Boston). A lot of buyers and little inventory around here. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted April 24, 2015 Share Posted April 24, 2015 Serious question: Has anybody overheard their dry cleaner or barber or pharmacist or deli guy talking about Amazon or any of the other overvalued tech stocks recently? I haven't so I don't see a crash any time soon. I remember overhearing long haul truck drivers in Kentucky talking excitedly about Yahoo! in '99 and I remember the absolute FRENZY to put down a contract on C level condos in my area in 2005... I think a lot of people deceive themselves that they can identify bubbles by listening to people make small talk. It is only easy in hindsight. +1 It was true of the tech bubble. There are many instances of severe corrections of 30, 40, or 50% without having your barber talking to you about stocks. Link to comment Share on other sites More sharing options...
philly value Posted April 25, 2015 Share Posted April 25, 2015 To me if you're going to have the bubble talk, I'd be using SHAK as the best current example and not AMZN. SHAK is one of the craziest things I've seen in a while and the price action over the past two weeks or so is like an unstoppable freight train, for no reason in particular. It seems everyone, even sell-side thinks it's overvalued but it just keeps going up and up. Looking at the general indices vs a particular stock like SHAK, my opinion has been that multiples are appropriate given where interest rates are. To be bearish you have to expect a sudden paradigm shift in corporate profit margins and/or interest rates. It seems that rates rising will correlate with positive economic developments, and thus the effects on multiples may be outweighed or counteracted by earnings growth. On the subject of margins, there's no real reason AFAIK to believe in mean-reversion for this variable but if you do think it'll happen, then stocks look expensive. Link to comment Share on other sites More sharing options...
BargainValueHunter Posted April 25, 2015 Share Posted April 25, 2015 Serious question: Has anybody overheard their dry cleaner or barber or pharmacist or deli guy talking about Amazon or any of the other overvalued tech stocks recently? I haven't so I don't see a crash any time soon. I remember overhearing long haul truck drivers in Kentucky talking excitedly about Yahoo! in '99 and I remember the absolute FRENZY to put down a contract on C level condos in my area in 2005... I think a lot of people deceive themselves that they can identify bubbles by listening to people make small talk. It is only easy in hindsight. +1 It was true of the tech bubble. There are many instances of severe corrections of 30, 40, or 50% without having your barber talking to you about stocks. O.K., any examples of a market that collapsed 50% where the general public was disinterested before the collapse? (No magazine covers, no commentary on news programs, no mention in late-night comedy chat show routines, etc.) Link to comment Share on other sites More sharing options...
CorpRaider Posted April 25, 2015 Share Posted April 25, 2015 87? Link to comment Share on other sites More sharing options...
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