1/ Thread: Update on $AMZN
“Amazon, as far as I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers”: Matthew Yglesias (2013)
No, my friend. Here's what AMZN is: It's a $1.6 Trillion startup.
“Amazon, as far as I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers”: Matthew Yglesias (2013)
No, my friend. Here's what AMZN is: It's a $1.6 Trillion startup.
2/ I mean it's the startups that grow at ~40% rate, right?
Jeff told us in Q1 "If you’re a shareowner in Amazon, you may want to take a seat.”
I didn't need a seat then, but I had to sit for a while after looking at ~40% growth in a company that generated $280 Bn sales in 2019.
Jeff told us in Q1 "If you’re a shareowner in Amazon, you may want to take a seat.”
I didn't need a seat then, but I had to sit for a while after looking at ~40% growth in a company that generated $280 Bn sales in 2019.
3/ "these profit levels are super high now. They're becoming super high at the company if you ex out the COVID costs. Is Jeff aware of how profitable the company is becoming? Is he happy about it?"
I chuckled after hearing RBC's Mahaney's question. Also asked a good q at $GOOG
I chuckled after hearing RBC's Mahaney's question. Also asked a good q at $GOOG
4/ Okay, let's dig deep now.
What drove such astonishing numbers?
Prime members. Higher renewal rate, higher new membership growth, larger basket size.
Win. Win. Win.
Streaming video hours 2x, online groceries 3x YoY
What drove such astonishing numbers?
Prime members. Higher renewal rate, higher new membership growth, larger basket size.
Win. Win. Win.
Streaming video hours 2x, online groceries 3x YoY
5/ The reason $AMZN grows like a startup is its high reinvestment runway. Its profits are perennially masked through reinvestment.
International profitable for the first time (if I'm not wrong). NA margins slightly declined.
International profitable for the first time (if I'm not wrong). NA margins slightly declined.
6/ AWS growth sequentially declines to 29%. Margins crossed ~30%, calming some questions on margin sustainability given competition from $MSFT and $GOOG.
Wondering what AWS would be worth if it were a separate company. ~30% growth and ~30% margin is way above the rule of 40.
Wondering what AWS would be worth if it were a separate company. ~30% growth and ~30% margin is way above the rule of 40.
7/ Emerging cloud index trades at 18x sales with index just above rule of 40. Since AWS is much above the rule of 40 than the index, it would probably trade ~20x sales.
That would make AWS a ~$850 Bn market cap company.
AWS had $1.8 Bn revenue in 2012.
That would make AWS a ~$850 Bn market cap company.
AWS had $1.8 Bn revenue in 2012.
8/ If it were indeed $850 Bn company, you could pay 220x sales of AWS in 2012 to generate ~10% CAGR return in last 8 years.
Valuing these companies is just like the Petersburg Paradox, as I have explained recently.
borrowedideas.substack.com/p/is-valuing-s…
Valuing these companies is just like the Petersburg Paradox, as I have explained recently.
borrowedideas.substack.com/p/is-valuing-s…
9/ $AMZN's emphasis on FCF is a thing of beauty. I wish every company took it by heart. It was there from the very first shareholder letter by Bezos.
The narrative that $AMZN built over the years and then backed it up every step the way is something is something to be studied
The narrative that $AMZN built over the years and then backed it up every step the way is something is something to be studied
10/ Of course, those topline growth also requires you to invest more and more (in fact, they had to "manage demand"):
Capex and finance leases up +65%
Grocery delivery capacity +160%
Expected network square footage growth +50%
Headcount +34%
Capex and finance leases up +65%
Grocery delivery capacity +160%
Expected network square footage growth +50%
Headcount +34%
11/ India continues to get attention from all the big tech. Since you cannot have China, India is the country that you cannot miss if you want to continue to ride the S-curve.
12/ Outlook
+24-33% topline growth
Don't think people would be surprised if they beat the high end of the guidance. Also, don't think most $AMZN shareholders don't really care much about quarterly guidance
"You get the shareholders you deserve"
+24-33% topline growth
Don't think people would be surprised if they beat the high end of the guidance. Also, don't think most $AMZN shareholders don't really care much about quarterly guidance
"You get the shareholders you deserve"
End/ Lots of other interesting tidbits in the call, but it's Friday, let's call it a day here.
In case you are curious, you can read my mega-thread on $AMZN posted back in March. +75% since then.
So Mr. Market probably already gets it. No easy money.
In case you are curious, you can read my mega-thread on $AMZN posted back in March. +75% since then.
So Mr. Market probably already gets it. No easy money.
