AMZN - Amazon.com Inc.

[physdude]

I understand, but isn't it typical to add capital leases to debt for valuation? Re: IBM debt, let's not forget, IBM also has a significant pension plan liability which is debt-like as well.

 

But I thought AMZN is supposed to be valued on their cash flows (presumably a sensible measure, not one that ignores more than half their capex). Further, the 10q seems to imply that most of the capital leases are for AWS which surely requires some maintenance capex. If my reasoning is correct, I think it speaks volumes that they now want investors to focus on AWS cash flows.

[Cardboard]

What happens if Hillary writes a Tweet about Amazon not treating its employees fairly and that they should be investigated?

 

http://www.latimes.com/business/la-fi-amazon-contractors-20151030-story.html

 

With minimum wage talks, inequality and all that, it would not take much for them to come under fire.

 

Cardboard

[rpadebet]

What happens if Hillary writes a Tweet about Amazon not treating its employees fairly and that they should be investigated?

 

http://www.latimes.com/business/la-fi-amazon-contractors-20151030-story.html

 

With minimum wage talks, inequality and all that, it would not take much for them to come under fire.

 

Cardboard

 

i sincerely hope she does. And I hope what happened to VRX after that happens here. I guess citron might not find it incredibly difficult to find a few smoking guns in form of shady suppliers.

 

Volatility like that is fun. What other edge do puny retail investors like us have when it comes to mega caps such as these. We would be forever condemned to micro caps if not for such occurrences.

[KCLarkin]

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...

 

Not to be a troll, but I finally got around to looking at their 3rd quarter earnings. Does anyone else find the "highlights" section to be a huge red flag? At best, this looks like a company that has terrible focus. At worst, it looks like they are trying to hide their financials behind a wall of "highlights". One of the highlights is the launch of "kindle unlimited" in India? I don't think that is even a highlight for Amazon India.

 

I am clearly overreacting, but putting this level of detail into a press release does not seem like rational behavior.

[Fly]

Rumor says AMZN will set up their own delivery infrastructure network, trucks/planes/etc. This would be a big blow to UPS. Would it wind up being a smart move for AMZN?

 

http://motherboard.vice.com/read/a-secretive-air-cargo-operation-is-running-in-ohio-and-signs-point-to-amazon

[valueinvestor82]

This last comment about being a threat to UPS is just the icing on the cake to how ridiculous the AMZN craze is becoming. AMZN will next announce that they're going to get into the business of making soft drinks and Coke will implode. Bezos is good at two things- gaining market share by selling goods at a loss and convincing shareholders that ROE is always in the future. AWS is the latest convenient distraction to take investors eyes off of the disaster known as the rest of Amazon. I can't wait to see the moment when expectations fall, because expectation of the future is the only thing AMZN has.

[Simple Investor]

Amazon is the first capitalist communists company or is it communist capitalist. 

[FCharlie]

This last comment about being a threat to UPS is just the icing on the cake to how ridiculous the AMZN craze is becoming. AMZN will next announce that they're going to get into the business of making soft drinks and Coke will implode. Bezos is good at two things- gaining market share by selling goods at a loss and convincing shareholders that ROE is always in the future. AWS is the latest convenient distraction to take investors eyes off of the disaster known as the rest of Amazon. I can't wait to see the moment when expectations fall, because expectation of the future is the only thing AMZN has.

 

Best post I've read in a LONG TIME.

[FCharlie]

Amazon has more market cap than WalMart, Target, Kroger, Macy's, Kohl's, The Gap, Big Lots, JC Penney, & Sears combined.

 

 

 

[DTEJD1997]

Amazon has more market cap than WalMart, Target, Kroger, Macy's, Kohl's, The Gap, Big Lots, JC Penney, & Sears combined.

 

Yes, and it's a bargain AT TWICE THE PRICE! (wink wink nudge nudge)

[ScottHall]

Amazon has more market cap than WalMart, Target, Kroger, Macy's, Kohl's, The Gap, Big Lots, JC Penney, & Sears combined.

 

Yes, and it's a bargain AT TWICE THE PRICE! (wink wink nudge nudge)

 

Just FYI the bears have looked like retards on Amazon for 15 years, so.

 

Not saying it's a huge market beater from here, but if you have doubts about the sustainability of the business model you haven't been paying attention.

[FCharlie]

Amazon has more market cap than WalMart, Target, Kroger, Macy's, Kohl's, The Gap, Big Lots, JC Penney, & Sears combined.

 

Yes, and it's a bargain AT TWICE THE PRICE! (wink wink nudge nudge)

 

Just FYI the bears have looked like retards on Amazon for 15 years, so.

 

Not saying it's a huge market beater from here, but if you have doubts about the sustainability of the business model you haven't been paying attention.

 

Isn't that part of the problem? Fund managers don't want to "look like retards" so they make sure AMZN is in their portfolio at any price?

 

All I'm saying is look at what you pay versus what you get. If you had $315 billion in cash, would you really rather own AMZN or would you prefer to own all of WMT, TGT, KR, M, KSS, GPS, BIG, JCP, & SHLD?

[Spekulatius]

Amazon has more market cap than WalMart, Target, Kroger, Macy's, Kohl's, The Gap, Big Lots, JC Penney, & Sears combined.

 

Yes, and it's a bargain AT TWICE THE PRICE! (wink wink nudge nudge)

 

I wouldn't want to own either one. AMZN has the potential to suck out a lot of  the profits from the retail business business. I would rather buy some industrials or costumer products companies like Nestle instead (assuming reasonable valuation metrics).

 

Just FYI the bears have looked like retards on Amazon for 15 years, so.

 

Not saying it's a huge market beater from here, but if you have doubts about the sustainability of the business model you haven't been paying attention.

 

Isn't that part of the problem? Fund managers don't want to "look like retards" so they make sure AMZN is in their portfolio at any price?

 

All I'm saying is look at what you pay versus what you get. If you had $315 billion in cash, would you really rather own AMZN or would you prefer to own all of WMT, TGT, KR, M, KSS, GPS, BIG, JCP, & SHLD?

[Palantir]

 

 

All I'm saying is look at what you pay versus what you get. If you had $315 billion in cash, would you really rather own AMZN or would you prefer to own all of WMT, TGT, KR, M, KSS, GPS, BIG, JCP, & SHLD?

 

I would prefer AMZN.

[rpadebet]

 

 

All I'm saying is look at what you pay versus what you get. If you had $315 billion in cash, would you really rather own AMZN or would you prefer to own all of WMT, TGT, KR, M, KSS, GPS, BIG, JCP, & SHLD?

 

I would prefer AMZN.

 

+1

 

Of course AMZN.

 

It is like asking someone in 1915, these 9 horse driven carts by different manufacturers cost the same or less than this motor driven Car. Which would you like to own?

[actuary]

 

 

All I'm saying is look at what you pay versus what you get. If you had $315 billion in cash, would you really rather own AMZN or would you prefer to own all of WMT, TGT, KR, M, KSS, GPS, BIG, JCP, & SHLD?

 

I would prefer AMZN.

 

+1

 

Of course AMZN.

 

It is like asking someone in 1915, these 9 horse driven carts by different manufacturers cost the same or less than this motor driven Car. Which would you like to own?

 

Sarcasm? It's not like that at all.

 

Are people really going to stop shopping in stores the way they stopped using horses and buggies? People have wanted to touch the goods they are buying since the beginning of markets. Especially food... aren't groceries something like 50% of WMT revenues? Has AMZN made any real progress in touching that after all these years?

 

Also, how hard would it have been for the cart manufacturers to replicate what Ford et al were doing? Versus... how hard it is for retailers like WMT, TGT with huge, efficient supply chains to build out an effective web presence? Sorry, but I don't see a similar barrier here.

 

My wife is a skilled shopper. Plenty of physical and online shopping. There is no question the mix has shifted online over time, but she has become more AMZN agnostic. When looking for something, she checks at least half a dozen ecomm sites at once. Price is all that matters, and AMZN gets less of the mix than a year or two ago. How can AMZN ever make much margin on this type of shopper? And doesn't new technology allow more shoppers to aggressively compare prices? Live by the sword, die by the sword.

 

Counter argument is that AMZN will be the low cost operator and win these customers with some margin some day... But why is that a slam dunk? Shouldn't the base case be that today's largest, most efficient supply chain (WMT) becomes the low cost operator online?

 

Also, isn't there ultimately more room to pad margin on impulse buys in the b&m environment versus ecomm? Especially when everyone in the world will be using apps to compare prices across all these ecomm sites?

 

Maybe I missed it as a casual reader of this thread... have any bulls provided an estimate of IV for AMZN?

 

Apologies for the tone here. It is mainly just frustration at not understanding the valuation. It is nice to have a post to mark my thinking so I can look back in the future if/when I am wrong to try to understand why. Thanks

 

 

[dwy000]

 

 

All I'm saying is look at what you pay versus what you get. If you had $315 billion in cash, would you really rather own AMZN or would you prefer to own all of WMT, TGT, KR, M, KSS, GPS, BIG, JCP, & SHLD?

 

I would prefer AMZN.

 

+1

 

Of course AMZN.

 

It is like asking someone in 1915, these 9 horse driven carts by different manufacturers cost the same or less than this motor driven Car. Which would you like to own?

 

Sarcasm? It's not like that at all.

 

Are people really going to stop shopping in stores the way they stopped using horses and buggies? People have wanted to touch the goods they are buying since the beginning of markets. Especially food... aren't groceries something like 50% of WMT revenues? Has AMZN made any real progress in touching that after all these years?

 

Also, how hard would it have been for the cart manufacturers to replicate what Ford et al were doing? Versus... how hard it is for retailers like WMT, TGT with huge, efficient supply chains to build out an effective web presence? Sorry, but I don't see a similar barrier here.

 

My wife is a skilled shopper. Plenty of physical and online shopping. There is no question the mix has shifted online over time, but she has become more AMZN agnostic. When looking for something, she checks at least half a dozen ecomm sites at once. Price is all that matters, and AMZN gets less of the mix than a year or two ago. How can AMZN ever make much margin on this type of shopper? And doesn't new technology allow more shoppers to aggressively compare prices? Live by the sword, die by the sword.

 

Counter argument is that AMZN will be the low cost operator and win these customers with some margin some day... But why is that a slam dunk? Shouldn't the base case be that today's largest, most efficient supply chain (WMT) becomes the low cost operator online?

 

Also, isn't there ultimately more room to pad margin on impulse buys in the b&m environment versus ecomm? Especially when everyone in the world will be using apps to compare prices across all these ecomm sites?

 

Maybe I missed it as a casual reader of this thread... have any bulls provided an estimate of IV for AMZN?

 

Apologies for the tone here. It is mainly just frustration at not understanding the valuation. It is nice to have a post to mark my thinking so I can look back in the future if/when I am wrong to try to understand why. Thanks

 

I have never seen an estimate of IV for AMZN that makes any sense at even half of today's price.  I would much rather own many of those other stocks - at least you can rationally calculate if it is cheap or not.  AMZN stock could be cut by 2/3's tomorrow and it would still be outrageously expensive because it doesn't generate cash flow.  Congrats to anyone who rode it up but don't kid yourself that it was a smart investment decision because it worked out.  If you can't justify why the price will rise then you're not investing you are riding momentum or gambling.

[DTEJD1997]

Hey all:

 

Being a Detroit native, I thought I would chime in on the horse & buggy comparison.

 

One big difference is that the early auto companies were insanely profitable.  It can be argued that the auto industry is largely responsible for the middle class in America.

 

Some might try to argue that it is still early in the race....AMZN got started sometime around 1996?  It is almost 20 years later, and substantial AMZN profits are still somewhere in the distant future.  Compare that to the auto industry.

 

Ford Motor Company was founded in the early 1900's (1903).  By 1923 Ford Motor's profits were estimated to be $119MM.  Somewhere around $690/share.  Mind you, these figures are in 1923 dollars, which were a little more valuable than dollars today.

 

So Ford was making a fortune 20 years into the automotive age.  AMZN is not making any substantial profit (yet).

 

For people that are buying AMZN today at $320BB market cap, how are they going to make a good future return.  Is AMZN going to be worth $650BB in 10 years?  That would equate to something around $1,500 for every single person in the USA.

 

Ford and the early auto manufacturers truly changed society in many different ways.  They produced an incredible product.

 

AMZN?  Interesting, efficient, sure...but what are they doing besides selling trinkets quicker & cheaper?

 

I just don't get it...but I've been saying that for a while and have been wrong about AMZN share price.

[ScottHall]

Sarcasm? It's not like that at all.

 

Are people really going to stop shopping in stores the way they stopped using horses and buggies? People have wanted to touch the goods they are buying since the beginning of markets. Especially food... aren't groceries something like 50% of WMT revenues? Has AMZN made any real progress in touching that after all these years?

 

Also, how hard would it have been for the cart manufacturers to replicate what Ford et al were doing? Versus... how hard it is for retailers like WMT, TGT with huge, efficient supply chains to build out an effective web presence? Sorry, but I don't see a similar barrier here.

 

My wife is a skilled shopper. Plenty of physical and online shopping. There is no question the mix has shifted online over time, but she has become more AMZN agnostic. When looking for something, she checks at least half a dozen ecomm sites at once. Price is all that matters, and AMZN gets less of the mix than a year or two ago. How can AMZN ever make much margin on this type of shopper? And doesn't new technology allow more shoppers to aggressively compare prices? Live by the sword, die by the sword.

 

What your wife does is irrelevant. Amazon is substantially outgrowing the growth rate of ecommerce as a whole - meaning it's taking share, not giving up share (in aggregate).

 

 

Counter argument is that AMZN will be the low cost operator and win these customers with some margin some day... But why is that a slam dunk? Shouldn't the base case be that today's largest, most efficient supply chain (WMT) becomes the low cost operator online?

 

That's been the base case for many shorts for fifteen years. It hasn't really worked out.

[Palantir]

Also, how hard would it have been for the cart manufacturers to replicate what Ford et al were doing? Versus... how hard it is for retailers like WMT, TGT with huge, efficient supply chains to build out an effective web presence? Sorry, but I don't see a similar barrier here.

 

So...what's stopped them so far?

[valueinvestor82]

Lack of focus. Walmart so much as admitted that. To use a current analogy, just because ISIS has been allowed to exist in Iraq doesn't mean that the US is incapable of BBQ'ing the region, we simply haven't make a concerted effort at it yet.  ;D WMT has way more firepower than AMZN ever will to tackle getting its online presence right. AMZN working capital deficit is accelerating. Doesn't anyone see AWS (whose biggest customer is humorously AMZN) as the latest distraction (bouncing ball) to get investors eyes off of a retail business that will never achieve the necessary profitability? It seems clear to me. But then again, I would have missed the initial run up in the tech bubble too.

[ScottHall]

Lack of focus. Walmart so much as admitted that. To use a current analogy, just because ISIS has been allowed to exist in Iraq doesn't mean that the US is incapable of BBQ'ing the region, we simply haven't make a concerted effort at it yet.  ;D WMT has way more firepower than AMZN ever will to tackle getting its online presence right. AMZN working capital deficit is accelerating. Doesn't anyone see AWS (whose biggest customer is humorously AMZN) as the latest distraction (bouncing ball) to get investors eyes off of a retail business that will never achieve the necessary profitability? It seems clear to me. But then again, I would have missed the initial run up in the tech bubble too.

 

Thank god for that.

[krazeenyc]

I'm a huge fan of Amazon as a customer (but at this market cap wouldn't possibly consider buying the stock -- it was interesting when it was 50% of Walmart's market cap IMO).  For those who think it's all about price when shopping ... consider my experience at Amazon.

 

I've been a prime customer 10 years now and for the last 5 years have probably average $10K per year with at least 100+ orders annually. At one point in my life I was fanatically about getting the best price -- now a reasonable price with superior customer service is perfect for me.  Honestly, I can't imagine our lives without Amazon, we've used Walmart.com a few times and they seem to bungle things a lot in the small sample size I have (3 of 5 times) -- for example they will put a 10lb bag of flour with bags of Cheetos with no packaging in between them. Then to rectify the situation they sent me 3 bags of Cheetos each packed in its own box!

 

Here are a few examples of Amazon delivering above and beyond for me just this year that I recall:

 

When our stroller that was less than 1 month old was stolen earlier this year -- I talked to customer service hoping to be able to repurchase the stroller ($200+) at the same sale price (>$50 cheaper) that I paid for it. I expected them to shoot me down -- because that would be the logical decision. Instead, they went above and beyond and sent me a brand new replacement free of charge.

 

When my kids' Halloween costumes looked like they weren't going to make it on time for Halloween due to UPS issues -- they sent me duplicates via next day air to make sure my kids would have their costumes on time free of charge (of course I sent back the other sets). 

 

When the remote controlled truck I bought for my son stopped working after it's second use (but 8 months after I bought it) they took it back for a full refund no questions asked.

 

When the instantpot we bought went on sale for $70 less than we paid for it 2 months earlier -- they gave us a courtesy credit of $70 to make up the difference.

 

I'd pay $99 a year just for 2 day shipping (given the level of service I receive at Amazon) -- now I get Prime Video (the kids love it), Prime Music, Cloud storage, Next day and same day shipping for some other stuff, etc. What's not to love? I imagine Amazon will continue to win more and more of my business. 

[TheAiGuy]

Price is all that matters

 

I think this assumption is wrong. Convenience (availability of product, speed of delivery, ease of use) and habit are also large factors.

[Jurgis]

WMT has way more firepower than AMZN ever will to tackle getting its online presence right.

 

We'll see how that goes.  ::)

 

Perhaps they should buy Jet.com  :P