Opinions
Andy Nasr
Amazon.com, Inc.
AMZN-Q
COMMENT
Oct 19, 2017
Stock price when the opinion was issued
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Premium contentAmazon.com, Inc. (NASDAQ: AMZN) is a global e-commerce giant, renowned for its vast selection of goods, swift delivery, and digital services. Founded in 1994 by Jeff Bezos, the company has diversified into various sectors including cloud computing via Amazon Web Services (AWS), media streaming, artificial intelligence, and more. Amazon's Market Capitalization ranks it among the largest companies globally, demonstrating its significant impact in multiple industries. However, its recent financial performance and trends require a close examination. Social media mentions are up 19.8% in the past 24h.
Yes, those earnings were disappointing. Still came ahead of what was expected, but not to the same tune as MSFT's or GOOG's. Just a matter of time before it ramps up again. Will continue spending on data centres, and this will pay off.
Sees a parallel to Q2 earnings for MSFT last year. Azure disappointed, stock dropped ~10-15%. Since then, it's up ~25-30%. Same thing should happen to AMZN in about a year.
This is the one of the group that's going to do the best going forward. With an understanding of tariffs going forward, AMZN will price accordingly; so the e-commerce side of the business will be more refined and its outlook better. No dividend.
Likes the whole AI play, it'll change the world. Biggest player in outsource infrastructure for computers; for example, SLF uses AMZN for its back office. Cheaper than the rest of the Mag 7. Buying opportunity and will catch up. AWS and advertising have much higher margins than the retail segment and are growing at a faster rate. No dividend.
(Analysts’ price target is $261.93)He believes in it. Was surprised by the quarter, namely AWS, the cloud. Ultimately, he likes their business model a lot, a hybrid of the consumer business and AWS. Trades at 30x forward PE, which some say is expensive. It would be a lot lower if they stopped their capex spending (on AI). There's no catalyst in immediate sight. If shares fall further, he will add.
It was coming into resistance and having a tough time leading to the report. Even if they had a great report, shares would have struggled around $206. MSFT had a monster report which raised the bar for cloud, so that's why Amazon is getting hit. He owns enough shares now, and won't add, but for someone entering, wait a few days for shares to settle.
She likes it and is adding to her position. It scores 9 out of 10 fundamentally and is re-writing the rules of AI in automation in the retail space. It is looking at optimization - robots can do 40% more in packaging. Amazon's general AI business is growing in the triple digits. Revenue is up 22%. She is watching the supply side which is little bit lagging. Same day delivery is expanding and it is doing well in cottage country.
Hold or Sell?If you are holding it, you are buying it. There is no question there is a tremendous amount of growth ahead. It’s very hard to justify valuation. While he has confidence that e-commerce penetration is going to increase very gradually from 9%-10% in the US, when you look at their valuation it is difficult to justify how much earnings are going to have to grow for the valuation to come down to a market multiple. Trades at about 110X next year’s earnings. If you take that market multiple and bring it down to a multiple of about 20, that implies earnings are going to have to grow at a compound annual growth rate of 48% over 10 years. Very few companies have been able to do that.