AMZN
Amazon.com Inc.
TMT, Consumer
04/05/2023
Presented
| Date | 03/30/2023 |
| Price | $102.00 |
| Market Cap | $1,045.22B |
| Ent Value | $950.45B |
| P/E Ratio | N/A |
| Book Value | $14.26 |
| Div Yield | 0% |
| Shares O/S | 10,247.30M |
| Ave Daily Vol | 68,536,284 |
| Short Int | 0.63% |
Current
| Price | $187.69 |
| Market Cap | $1,969.92B |
| Amazon.com, Inc. is a multinational technology company, which engages in the provision of online retail shopping services. It operates through the following segments: North America, International, and Amazon Web Services (AWS). The North America segment is involved in the retail sales of consumer products including from sellers and subscriptions through North America-focused online and physical stores. It also includes export sales from online stores. The International segment focuses on the amounts earned from retail sales of consumer products including from sellers and subscriptions through internationally-focused online stores. The AWS segment consists of global sales of compute, storage, database, and other services for start-ups, enterprises, government agencies, and academic institutions. The company was founded by Jeffrey P. Bezos in July 1994 and is headquartered in Seattle, WA. |
Publicly traded companies mentioned herein: Alphabet Inc. (GOOG), Amazon.com Inc. (AMZN), Apple Inc. (AAPL), Costco Wholesale Corp., Meta Platforms Inc. (META), Microsoft Corp. (MSFT), Walmart Inc. (WMT),
Highlights
The presenter is short shares of Amazon (AMZN) with concerns over AMZN’s outlier valuation compared to other companies that have stronger earnings potential and trade at lower valuations. He believes that bulls are underestimating the potential weakness in the retail business and still believe that AWS can drive AMZN's growth going forward. With AMZN’s lower margins, lower returns on capital, and higher asset intensity, he thinks 41x EPS is overly generous when compared to peers in the 20-30x range. He believes Amazon runs a potential risk of having a lost decade of valuation creation, not dissimilar to what happened with Microsoft after 2000, where the company saw solid earnings growth and multiple compression at the same time. Amazon’s PE valuation may move inline with FAANG peers: Meta (14x), Apple (25x), Netflix (24x), and Alphabet (17x). While AWS has been a major driver for AMZN’s multiple expansion, AMZN is facing a lot of pressure from competitors offering cloud along with an increasing number of other services that customers like (e.g., MSFT with Office 365, Teams, etc.). On top of this, there is pressure by customers to optimize cloud spend, which should weigh on overall growth in the space. If his thesis holds, AMZN could face multiple compression due to slowing growth from both AWS and retail that would weigh on stock performance.
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