Author Topic: AMZN - Amazon.com Inc.  (Read 651580 times)

gfp

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Re: AMZN - Amazon.com Inc.
« Reply #2170 on: October 12, 2018, 01:37:47 PM »
Thatís a funny one - Iíll have to try that one sometime. #notdelighted


Liberty

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Re: AMZN - Amazon.com Inc.
« Reply #2171 on: October 15, 2018, 07:34:02 AM »
https://www.business-standard.com/article/companies/amazon-bids-400-mn-for-stake-in-spencer-s-deal-stuck-at-valuation-stage-118101300715_1.html

Quote
RP-SGís food and grocery retail chain, Spencerís Retail, which is in talks with multiple players including Alibaba, has been offered more than $400 million by Amazon for a minority stake.

People familiar with the development said it is likely that Amazon was eyeing a 30 per cent stake. The deal with Amazon was believed to be in the penultimate stage but was held up due to valuation, the sources indicated.
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EricSchleien

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Re: AMZN - Amazon.com Inc.
« Reply #2172 on: October 15, 2018, 07:55:11 AM »
Interview with Marcelo Lima on Amazon

https://intelligentinvesting.podbean.com/e/37-amazon/

Liberty

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Re: AMZN - Amazon.com Inc.
« Reply #2173 on: October 22, 2018, 10:57:10 AM »
CEO of AWS also asking for Bloomberg to retract Chinese hack story, after Apple did it:

https://twitter.com/ajassy/status/1054401346827243520
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Liberty

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pcm983

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Re: AMZN - Amazon.com Inc.
« Reply #2175 on: October 25, 2018, 01:27:58 PM »
what do ppl think? miss on what ppl thought was conservative guide seems bad. plus 4q guidance way off. would think people will be selling here given the valuation

walkie518

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Re: AMZN - Amazon.com Inc.
« Reply #2176 on: October 25, 2018, 04:47:47 PM »
what do ppl think? miss on what ppl thought was conservative guide seems bad. plus 4q guidance way off. would think people will be selling here given the valuation
AH response is very negative (though AMZN was up 7% today), but I think it's likely that the Q4 guidance is for purpose of setting a low bar.

My first thought is that with 52% increase in subscription revenues, this should mean there are more prime members than ever.

Then again, the mix of subscription revenues is likely changing such that Amazon prime members might have more than one membership (think audible, music, and prime from just prime) or other parts of the membership services business is growing simultaneously: that is, the ratio of sales to subscription revenues has dropped from ~10.8x in Q3 2017 down to 7.9x this past quarter...so less conversion per dollar of subscription revenues

Then again, advertising is up 122% Y/Y.  Facebook showed $40B of sales last year and Amazon is showing a $10B run-rate for a business that's built into the rest of its operations (ie should have greater scale and product than FB since AMZN knows its customers' buying habits)...this might imply that if broken out, on similar price/sales to FB, Amazon's Ad business could be worth $90B?   

dwy000

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Re: AMZN - Amazon.com Inc.
« Reply #2177 on: October 25, 2018, 05:24:58 PM »
Walkie - where are you seeing 52% growth in subscription revenues?  Was that in the conference call?

I found it interesting that Unearned Revenues seems to have stopped growing.  That's been a huge source of cash for the past few years as Prime membership grew.  With a 20% increase in Prime price, I'm wondering if that implies a flattening or reduction in Prime membership, either now or going forward.

It will be interesting to watch the stock price as the company's growth slows.  At 30% y-o-y revenue growth, the market is willing to forgive minimal profitability in the name of growth.  At 10-20% growth (projected for 4Q) and considering AWS should be much higher than that it suggests product growth at the lower end.  At some point investors will switch from momentum growth (GARP) to earnings based valuation.  Interesting to see if those can rise fast enough to satisfy or offset growth slowing.

mjs111

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Re: AMZN - Amazon.com Inc.
« Reply #2178 on: October 25, 2018, 10:11:25 PM »
Subscription revenues are broken out at the bottom of the 8-K.  If you search for "subscription" you'll find it.


Mike

walkie518

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Re: AMZN - Amazon.com Inc.
« Reply #2179 on: October 29, 2018, 07:53:42 AM »
Walkie - where are you seeing 52% growth in subscription revenues?  Was that in the conference call?

I found it interesting that Unearned Revenues seems to have stopped growing.  That's been a huge source of cash for the past few years as Prime membership grew.  With a 20% increase in Prime price, I'm wondering if that implies a flattening or reduction in Prime membership, either now or going forward.

It will be interesting to watch the stock price as the company's growth slows.  At 30% y-o-y revenue growth, the market is willing to forgive minimal profitability in the name of growth.  At 10-20% growth (projected for 4Q) and considering AWS should be much higher than that it suggests product growth at the lower end.  At some point investors will switch from momentum growth (GARP) to earnings based valuation.  Interesting to see if those can rise fast enough to satisfy or offset growth slowing.
I'm not sure this is the right way  to look at it. Though what I'm about to write some might consider a little crazy?  Thoughts appreciated.

There are many moving pieces.  This morning, we see a lesser company to AWS (RedHat) being bought by IBM for $33B.  The sale will consumate around 11x sales.  While IBM is not the poster child of success for this decade...

If AWS weren't the leader, this would likely be a fair multiple.  Backwards looking, this values AWS at $294B.  At some point growth in this business will slow down from 46% Y/Y, but the runway is much longer than most believe as the number of companies still using mainframes (shocking but true) move to cloud and/or hybrid solutions.  The shift is inevitable since AWS is pricing out client-server (the next logical step), and it's likely that AWS gets most new business as prima facie. Doubling and even tripling the size of this market is not out of order from here over the next decade.  That said, you are correct in saying that multiples are likely to contract over time.

Say AWS triples in size over a decade (substantive discount to 46% Y/Y) and the multiple contracts to 5x inline with other companies that have lesser growth prospects but high margins (Ferrari, WDFC, etc), AWS is then worth 5 x $26.7B x 3 = $400B. 

Advertising is a very valuable business.  $74B would make sense if AMZN had the same information as FB, but AMZN likely will eat FB's lunch since the former can verify.  Including growth q/q and AMZN's advantage, $100B is not out of line. 

Maybe the online retail business (mingling domestic and int'l) should trade in line w/WMT (0.6x sales).  This doesn't makes total sense but it's the best comp.  1p (incl physical stores) could be worth $81B while 3p trades at the eBay multiple of 2.7x sales showing a value of $108B.  AMZN's 3p is certainly a better business than eBays, but let's forget this.  We also forget that AMZN's web business has more intrinsic value than any other etailer's due to networking effects.

Subscription services isn't part of this calculation, but this "division" adds $13.4B of very high margin fees.  While a slower grower, this bucket is an indicator of growth down the line outside of AWS.  Since it's intermingled, I have trouble assigning a value to this other than perhaps weighting according to sales--back of the env I see 1.9x valuing this piece at $25B.  The problem with this figure is that other subscription businesses can trade at multiples to this multiple. 

Adding all pieces up, you get a figure around $714B...discount for conglomerate at 10% = $643B of value backwards looking or ~$1315/sh. 

Any material growth to sales and/or margins obviously brings this figure higher, and should the whole pie grow at 10% for the next 7 years, underlying value should double.  Should AMZN continue to show 30% sales growth, well...


The following is more for academic purposes:

Markets are public auctions and turning back to a relatively healthy company like a John Deere for example, you'll find a high of $175 and a low of $130...25-35% price deviation over the course of a year while the business has not changed materially

Using 1315 as a midpoint, the range could be from 1000/sh to 1775/sh...funny enough, looking at AMZN's chart, you see a 52wk range from 1086-2050...just a little more volatility than the combine/tractor manufacturer!