Guest Schwab711 Posted June 24, 2015 Share Posted June 24, 2015 1st 3 columns are AMZN at 20%, 15%, and 10% growth. 4th column is Walmart at 3.5% growth. 10-12% long-term revenue growth seems a lot more realistic then anything above 15%. Link to comment Share on other sites More sharing options...
merkhet Posted June 24, 2015 Share Posted June 24, 2015 We are still discussing lack of GAAP profits as a salient point for AMZN? What makes you think that? Link to comment Share on other sites More sharing options...
JAllen Posted June 24, 2015 Share Posted June 24, 2015 I think the situation is a whole lot different than it was when the stock was ~$300 Link to comment Share on other sites More sharing options...
ZenaidaMacroura Posted June 24, 2015 Share Posted June 24, 2015 1st 3 columns are AMZN at 20%, 15%, and 10% growth. 4th column is Walmart at 3.5% growth. 10-12% long-term revenue growth seems a lot more realistic then anything above 15%. lol did you correct the spreadsheet? I saw the first upload and was totally bamboozled. Link to comment Share on other sites More sharing options...
merkhet Posted June 24, 2015 Share Posted June 24, 2015 1st 3 columns are AMZN at 20%, 15%, and 10% growth. 4th column is Walmart at 3.5% growth. 10-12% long-term revenue growth seems a lot more realistic then anything above 15%. I agree -- the 20% CAGR was just thrown out there as an example to figure out the impact of "overpaying" at the outset. It wasn't necessarily referencing revenue growth. Although, if the FCF margin grows from, say 5% to 15%, you could get FCF growth of 20% CAGR w/o a correspondingly high amount of revenue growth. (Again, just random margin guesses.) Edit: Actually, by 2035, global retail spending should be at around $60 trillion, so is 6% of that spending totally out of the question for Amazon? I think the situation is a whole lot different than it was when the stock was ~$300 Agree. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted June 24, 2015 Share Posted June 24, 2015 1st 3 columns are AMZN at 20%, 15%, and 10% growth. 4th column is Walmart at 3.5% growth. 10-12% long-term revenue growth seems a lot more realistic then anything above 15%. lol did you correct the spreadsheet? I saw the first upload and was totally bamboozled. haha yes. If you figure they need at least $50b in FCF by 2035 to achieve 8.4% returns (20x FCF or $1T MC in 2035) you need: 10% rev growth => 10% net margins or 15% rev growth => 3.3% margins Link to comment Share on other sites More sharing options...
rpadebet Posted June 24, 2015 Share Posted June 24, 2015 Just would like to point out a few things 1. Revenue from WMT and Revenue from AMZN are not directly comparable. You need to make a 3p/1p adjustment to get GMV which is comparable to WMT revenue. 2. AMZN is not just eCommerce, especially if you are looking 10-15 years out. AWS is going to be a significant component and as mentioned on the previous call, could be comparable if not bigger than retail business in a decade 3. eCommerce is still a tiny portion of global retail and AMZN's share within eCommerce is expanding. If you think global retail grows at 4-5% (nominal) and eCommerce within it grows at 10%+, then 15%+ growth for AMZN isn't that hard. Now also tag on AWS and growth isn't that hard to see. 4. Also not all retail sales are made equal. For example in terms of profitability margins if I were to segment it broadly, Fashion> Books> Electronics> Groceries. So if AMZN grows by selling perishable groceries, I wouldn't be as excited as I would be if they grew by selling luxury watches or clothes Link to comment Share on other sites More sharing options...
rpadebet Posted June 24, 2015 Share Posted June 24, 2015 And for those that think they would have liked AMZN at 300, you should take a look at BABA now. If you think AMZN's net margins are razor thin, take a look at BABA and compute net margins over GMV, they are closer to 1%. Ignore the growth potential, but just getting the net margins to 2% range would make it cheaper than WMT on fwd basis. The difference I see in AMZN and BABA investment model is AMZN is just a lot more aggressive with the their reinvestment making traditional valuation difficult. Link to comment Share on other sites More sharing options...
TheAiGuy Posted June 28, 2015 Share Posted June 28, 2015 Here's a link to a Steve Romick speech were he has some thoughts on Amazon Business in relation to Fastenal and Grainger (page 15). Though it might be interesting to some http://www.fpafunds.com/docs/special-commentaries/cfa-society-of-chicago-june-2015-final.pdf?sfvrsn=2 Link to comment Share on other sites More sharing options...
Kiltacular Posted June 29, 2015 Share Posted June 29, 2015 Here's a link to a Steve Romick speech were he has some thoughts on Amazon Business in relation to Fastenal and Grainger (page 15). Though it might be interesting to some http://www.fpafunds.com/docs/special-commentaries/cfa-society-of-chicago-june-2015-final.pdf?sfvrsn=2 Thanks. Interesting commentary. Link to comment Share on other sites More sharing options...
rpadebet Posted June 30, 2015 Share Posted June 30, 2015 Here's a link to a Steve Romick speech were he has some thoughts on Amazon Business in relation to Fastenal and Grainger (page 15). Though it might be interesting to some http://www.fpafunds.com/docs/special-commentaries/cfa-society-of-chicago-june-2015-final.pdf?sfvrsn=2 As much as I love AMZN and respect Steve Romick as an investor, I have to disagree with his assumption here that FAST will have its lunch eaten by AMZN sometime soon. FAST has those crazy margins in a distribution business for a reason. Their business model is such that they tie themselves intricately into their clients business. If you want to buy something on AMZN, you still have to go on the website and make the purchase and you will hopefully get it the next day. What FAST has done is not only eliminate the wait, but in some cases even avoid the purchasing decision. They actively monitor their clients inventory and top it off as needed without the client having to monitor and make the purchasing decision. This is a rare example of AMZN's model not being able to hold a candle to the incumbents model. Imagine a scenario where a manufacturing operation needs some fasteners immediately. These are minor cost components in their whole setup but really important in terms of the value they add (their absence at the exact time they are needed could cause a lot of process delays). When the worker on the floor goes to his supervisor and says, "we are out of some fasteners...could you place an order soon", do you think the supervisor will go on AMZN, place the order and wait for AMZN to deliver next day to save a few cents off the fasteners? Especially if they have a relationship with FAST and FAST has maintained a reasonable inventory in their basement? Even if FAST charges a higher amount for exact same fasteners, the immediate availability adds value to the client. They are going with FAST 9 out of 10 times. Link to comment Share on other sites More sharing options...
ZenaidaMacroura Posted July 20, 2015 Share Posted July 20, 2015 Great interview, sorry if it's already been posted. bezos clearly gets it. Link to comment Share on other sites More sharing options...
rpadebet Posted July 23, 2015 Share Posted July 23, 2015 http://seekingalpha.com/news/2653555-amazon-up-18_3-percent-after-q2-beat-aws-growth-accelerates-to-81-percent AWS accelerating like crazy... I sold partially into earnings....feeling stupid After Hours. Link to comment Share on other sites More sharing options...
Palantir Posted July 23, 2015 Share Posted July 23, 2015 #holdforever Link to comment Share on other sites More sharing options...
rkbabang Posted July 29, 2015 Share Posted July 29, 2015 Drone Control: Here’s How Amazon Thinks Drones Should Fit Into U.S. Airspace http://spectrum.ieee.org/img/1906-1438131996458.jpg Link to comment Share on other sites More sharing options...
merkhet Posted October 13, 2015 Share Posted October 13, 2015 http://heilbrunncenter.org/sites/default/files/civicrm/persist/contribute/file/Graham%20%26%20Doddsville_Issue%2025.pdf Really interesting comments on Amazon, AWS & the S-curve by the guy that runs Whale Rock Capital. Link to comment Share on other sites More sharing options...
ScottHall Posted October 22, 2015 Share Posted October 22, 2015 So Amazon did it again. Unfortunate that I only took a small position here... oh well, up >100% so it's now a mid-sized one. :) 30% revenue growth, adjusted for currency. Unreal that it's still growing so quickly at this size. http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-newsArticle&ID=2100418 Link to comment Share on other sites More sharing options...
rpadebet Posted October 22, 2015 Share Posted October 22, 2015 Yes. Up > 100% in less than 10 months...pretty crazy. Mid size position for me which I trimmed last quarter unfortunately. 10% of my Roth IRA though now... Link to comment Share on other sites More sharing options...
Palantir Posted October 22, 2015 Share Posted October 22, 2015 20% of my Roth IRA, wish I'd bought more at 300... Link to comment Share on other sites More sharing options...
ScottHall Posted October 22, 2015 Share Posted October 22, 2015 20% of my Roth IRA, wish I'd bought more at 300... Congrats! Looks like your conviction is paying off. :) Link to comment Share on other sites More sharing options...
plato1976 Posted October 23, 2015 Share Posted October 23, 2015 no basher any more? quiet here I sold half between 500 and 600 - too early? 20% of my Roth IRA, wish I'd bought more at 300... Link to comment Share on other sites More sharing options...
Palantir Posted October 23, 2015 Share Posted October 23, 2015 20% of my Roth IRA, wish I'd bought more at 300... Congrats! Looks like your conviction is paying off. :) Thanks. These guys did 9B OCF TTM...pretty huge! Link to comment Share on other sites More sharing options...
ScottHall Posted October 23, 2015 Share Posted October 23, 2015 no basher any more? quiet here I sold half between 500 and 600 - too early? 20% of my Roth IRA, wish I'd bought more at 300... I'd guess folks wised up and threw in the towel if they were short. Link to comment Share on other sites More sharing options...
Cardboard Posted October 23, 2015 Author Share Posted October 23, 2015 You should rejoice, trading well over 100 times next year earnings estimates and 350+ times this year, for a company with a market cap of $285 billion! This company will never be profitable enough to justify its multiple. Never! If they ever raise prices to make real money, sales would collapse. No, you are right, I am not short since a long time. However, I am firmly convinced that this story will end just like Valeant. In the span of a month or two, the share price will be cut by more than half and the story will be over. Fear will grab investors and employees and the company will have to change its strategy. The timing or how high this can go is unpredictable. There are already cracks: size or law of large numbers, treating employees like slaves, large companies now competing with them with the same weapons: Microsoft, Alibaba. Now you may laugh and say look, they still grew sales 30% this quarter. Eventually, the pace can`t continue. You bump into issues. The organization becomes more complex and bureaucracy takes over. This is true throughout history with any empire and without any exception. Cardboard Link to comment Share on other sites More sharing options...
Guest Grey512 Posted October 23, 2015 Share Posted October 23, 2015 The company trades at a 1.5% free cash flow yield. And that free cash flow is compounding at 15% p.a. The moat is growing every year. Going long AMZN is not the worst idea in the world. Ever greater number of people are realizing that. Now you may laugh and say look, they still grew sales 30% this quarter. Eventually, the pace can`t continue. You bump into issues. The organization becomes more complex and bureaucracy takes over. This is true throughout history with any empire and without any exception. Cardboard The global trend away from brick&mortar and towards e-commerce (read: Amazon) is incredibly powerful and has a long runway. AMZN can still grow cash flows by at least 15% CAGR for as long as the eye can see. Link to comment Share on other sites More sharing options...
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