Author Topic: AMZN - Amazon.com Inc.  (Read 623567 times)

ajc

  • Hero Member
  • *****
  • Posts: 548
Re: AMZN - Amazon.com Inc.
« Reply #340 on: December 20, 2013, 05:17:14 PM »
Amazons greatest strength is the lack of people willing to do a financial analysis.

Unfortunately valueInv, I think you're confusing the stock price with the roughly definable intrinsic value of the underlying business.

How many people do or don't do a financial analysis of the business really has very little to do with its various internal strengths as a company (of which its emphasis on tax-efficiency is one).
I'm not sure if that's a fact which you're at all aware of.

Anyway, I just thought it might be helpful for me to point it out since you seem to be mixing up the extrinsic with the intrinsic in terms of business value there.

Oh, I'm aware of it all right. If people started asking the right questions, Bezos wouldn't be able to do all the things he is doing right now. That would impact what happens internally and the intrinsic value.

Okay sure, but I'm still confused about how intrinsic value being lumpy over time explains your line that Amazon's greatest strength is an external factor.

That still makes as little sense to me now as when I first read it. It just doesn't sound believable.
@tonyjclayton


valueInv

  • Guest
Re: AMZN - Amazon.com Inc.
« Reply #341 on: December 20, 2013, 07:46:51 PM »
Amazons greatest strength is the lack of people willing to do a financial analysis.

Unfortunately valueInv, I think you're confusing the stock price with the roughly definable intrinsic value of the underlying business.

How many people do or don't do a financial analysis of the business really has very little to do with its various internal strengths as a company (of which its emphasis on tax-efficiency is one).
I'm not sure if that's a fact which you're at all aware of.

Anyway, I just thought it might be helpful for me to point it out since you seem to be mixing up the extrinsic with the intrinsic in terms of business value there.

Oh, I'm aware of it all right. If people started asking the right questions, Bezos wouldn't be able to do all the things he is doing right now. That would impact what happens internally and the intrinsic value.

Okay sure, but I'm still confused about how intrinsic value being lumpy over time explains your line that Amazon's greatest strength is an external factor.

That still makes as little sense to me now as when I first read it. It just doesn't sound believable.

What is Amazon's intrinsic value and how did you arrive at it?

Palantir

  • Hero Member
  • *****
  • Posts: 2620
Re: AMZN - Amazon.com Inc.
« Reply #342 on: December 20, 2013, 08:26:45 PM »
^What is GOOG's intrinsic value and how did you arrive at it? While we're at it, tell us AAPL's intrinsic value too.
My Portfolio: AMZN, PAGP, FSLR, OKE, PYPL, RHT, MSFT

ajc

  • Hero Member
  • *****
  • Posts: 548
Re: AMZN - Amazon.com Inc.
« Reply #343 on: December 21, 2013, 06:56:45 AM »
What is Amazon's intrinsic value and how did you arrive at it?

Hey valueInv, I think I've got a better idea.
There's already an existing discussion going on about Amazon's intrinsic value and how it relates to what you said.

Instead of trying to skip ahead of the conversation, why not just just lay out the reasons why you said what you did?
We're all here to learn, I'm not sure why it has to be more complicated than that...
@tonyjclayton

valueInv

  • Guest
Re: AMZN - Amazon.com Inc.
« Reply #344 on: December 21, 2013, 08:32:46 AM »
^What is GOOG's intrinsic value and how did you arrive at it? While we're at it, tell us AAPL's intrinsic value too.

Google - Around $500. What they are doing is unsustainable. However, they should be able to eke out average growth in most scenarios, so I would be willing to buy if they fell significantly below average price. Below $500, you have a margin of safety against management blunders.

Apple - Around $700. I am willing to pay an above average multiple due to combination of factors - growth in existing device product lines, introduction of
services above device product lines, new device product lines and capital return to shareholders under favorable terms.

valueInv

  • Guest
Re: AMZN - Amazon.com Inc.
« Reply #345 on: December 21, 2013, 08:34:39 AM »
What is Amazon's intrinsic value and how did you arrive at it?

Hey valueInv, I think I've got a better idea.
There's already an existing discussion going on about Amazon's intrinsic value and how it relates to what you said.

Instead of trying to skip ahead of the conversation, why not just just lay out the reasons why you said what you did?
We're all here to learn, I'm not sure why it has to be more complicated than that...

Tell me what it is and how you arrived at it, and I will demonstrate what I meant.

Palantir

  • Hero Member
  • *****
  • Posts: 2620
Re: AMZN - Amazon.com Inc.
« Reply #346 on: December 21, 2013, 08:47:45 AM »
How did you derive your numbers?
My Portfolio: AMZN, PAGP, FSLR, OKE, PYPL, RHT, MSFT

valueInv

  • Guest
Re: AMZN - Amazon.com Inc.
« Reply #347 on: December 21, 2013, 09:15:44 AM »
How did you derive your numbers?

By understanding the business inside out, assigning  probabilities and tracking every aspect of the companies and industry closely. What I know about Apple can easily fill a book.

Palantir

  • Hero Member
  • *****
  • Posts: 2620
Re: AMZN - Amazon.com Inc.
« Reply #348 on: December 21, 2013, 09:31:58 AM »
So in other words, no rationale. Great, may as well close these threads.
My Portfolio: AMZN, PAGP, FSLR, OKE, PYPL, RHT, MSFT

link01

  • Lifetime Member
  • Sr. Member
  • *****
  • Posts: 480
Re: AMZN - Amazon.com Inc.
« Reply #349 on: December 21, 2013, 10:12:04 AM »
.. Thus, I would be shocked to begin seeing AMZN's capex requirements moderate significantly. Given the company had capex of $4.6 BN during the same period, it is very hard to argue D&A won't need ongoing replacement, and thus those non-cash adjustments to net income may not really accrue to shareholders over the long term as free cash.with a fast growing co like amzn there should really be a distinction made between maintenance capex & growth capex. as well, a significant part of azmn's COGS today are for new businesses that wont achieve scale, profitability, or even cash flow break-even till 2016 or beyond

Another $1 BN of AMZN's OCF relates to more non-cash addbacks for stock compensation. I presume no one on this board is naive enough to think that expense doesn't have a far less visible but deleterious effect on shareholder value via dilution.amzn has been expensing their stock options since 2002, so that's a hit to their income statement. as far as dilution goes I think you'll find amzn is quite cognizant of the tradeoffs (just read thru his annual letters) & manages it in a thoughtful way. their share count growth has been quite tame in comparison with other hi growth or hi tech co's. Bezos has said he tries to cap it at no more than 3%

Lastly, AMZN's ability to run its operations with negative working capital generated an incremental $1 BN (approx) in OCF. This, however, is a transitory source of cash that can easily become a use of cash if/when growth slows. I don't see how slowing growth would affect its negative working capital, or how slowing would become a use of cash. if amzn suddenly suffered the reverse of growth, that's another story. and I don't think amzn's neg working capital is transitory at all. its shown persistence. that wont change until they lose their moat