Author Topic: AMZN - Amazon.com Inc.  (Read 651032 times)

Palantir

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Re: AMZN - Amazon.com Inc.
« Reply #490 on: June 22, 2014, 07:40:14 AM »
Sigh...
My Portfolio: AMZN, PAGP, FSLR, OKE, PYPL, RHT, MSFT


PatientCheetah

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Re: AMZN - Amazon.com Inc.
« Reply #491 on: June 22, 2014, 07:59:19 AM »
Sigh...

Think of this way, we always need someone to sell us the shares.
risk as little as possible until all the stars have aligned

Longer Term: FB MSFT BABA JD YRD

Patmo

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Re: AMZN - Amazon.com Inc.
« Reply #492 on: June 22, 2014, 08:19:00 AM »
Personally I'll just stay on the sidelines and eat my popcorn. Good luck to everyone who takes action, it'll be interesting to see how this plays out.

wachtwoord

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Re: AMZN - Amazon.com Inc.
« Reply #493 on: June 22, 2014, 09:25:18 AM »
Sigh...

Think of this way, we always need someone to sell us the shares.

I don't own any but this one is certainly on my too difficult pile.
"Beware of he who would deny you access to information, for in his heart he dreams himself your master"

DTEJD1997

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Re: AMZN - Amazon.com Inc.
« Reply #494 on: June 22, 2014, 11:44:37 AM »

I don't own any but this one is certainly on my too difficult pile.

You bring up a good point that I should have made...If a thesis takes a substantial amount of explaining logic leaps is there not some risk in that? 

If the company can do X, and keep growing for Y periods of time, enter these other Z markets, then they raise profitability in the distant future...BAMMO! PROFIT!

If an investment idea has arguments going back & forth for 50 pages maybe that should go in the "too difficult pile".

Wasn't it WEB that said something like this?

Myth465

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Re: AMZN - Amazon.com Inc.
« Reply #495 on: June 22, 2014, 07:24:49 PM »
Aw but we have threads on =

Sandridge Energy (Im a big part of this one  :)) )
Sears Holding
Level 3
Altius
Blackberry

and about 3 other threads which goes against that....

txlaw

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JAllen

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Re: AMZN - Amazon.com Inc.
« Reply #497 on: June 26, 2014, 06:02:48 AM »

Have you read this thread from the start (especially JAllen's posts)? You will see why some find the bull case for AMZN to be quite persuasive. I think the fact that people keep bringing the 400 PE, something that has been discussed many times here, shows that people are not trying to see the other side of the case.

This is not a "value investment" at all, this is something that is not obviously cheap, but I think there is reason to believe that this can be a great investment.

I will admit that I have not read EVERY single post in the thread, but I've read maybe 2/3 of them.  The thread is rather long.

It is not simply the 400 P/E, but that is certainly a part of it.

Sales that are not profitable, or are only barely profitable, are not very valuable sales at all.  What is the point if at the end of the day you do not get to keep anything?  This goes for me, or for anyone else.

Customer loyalty is fine, but it is easy to buy loyalty with cheap prices.  AMZN or anyone else will find that customer loyalty based on low prices is as fleeting as the wind.

The other side of the case is that AMZN is foregoing profitability to grow sales, to gather customers...Profitability is also masked by spending on infrastructure & technology.  If AMZN were in a good field they would be able to DO BOTH.  Grow & invest in the business AND have profits left over.

I've purchased a few things from AMZN in the past.  Their prices are good, but I can frequently find lower prices elsewhere.  A good percentage of items I purchase I need right now...gasoline, vegetables & consumables, precious metals, computer components, etc.  Some items I purchase such as clothes I need to see in person.  I suppose some clothes (socks, underwear, belts) could be bought online, but a lot I want to see in person.

I can remember during the internet bubble of the 90's, there were similar arguments made...that profit was a secondary or tertiary concern.  We all know how that ended.

I would also suggest that if a company, ANY COMPANY, can't/won't achieve profitability after $75BB in sales, they never will...


But what if they intentionally choose not to?  Have you opened your mind to this possibility?


How is waiting to be and choosing not to be profitable by investing so heavily and with expenses not possible even with a company with $90B in sales?  The two don't directly follow actually.  It seems like lots of looking at the past and not enough being curious about the future.


With this thread, the AMZN proponents have mostly written in the last ten or fifteen pages I believe, so it's not necessary to review the whole thread by any means.  Have you seen my charts with eight years of historical close to double-digit FCF margins and the chart with the rate at which they've expanded their warehouses compared with 2002-2009?  That is a 57% FC square footage increase versus a 20% FC square footage increase.  There's also the many other programs they're developing that have non-trivial expenses.

JAllen

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Re: AMZN - Amazon.com Inc.
« Reply #498 on: June 26, 2014, 06:12:20 AM »

I don't own any but this one is certainly on my too difficult pile.

You bring up a good point that I should have made...If a thesis takes a substantial amount of explaining logic leaps is there not some risk in that? 

If the company can do X, and keep growing for Y periods of time, enter these other Z markets, then they raise profitability in the distant future...BAMMO! PROFIT!

If an investment idea has arguments going back & forth for 50 pages maybe that should go in the "too difficult pile".

Wasn't it WEB that said something like this?


Couldn't one also argue that the longer the thesis, potentially the more evidence has been provided and/or the less obvious it is?  Would either of these things be bad?  Weschler claims to spend 500 hours researching each investment - are his investments mistakes because of this?


I could also have stated my thesis succinctly and not backed it up with evidence, like this:


  • Young, ablest CEO in America according to Warren Buffett
  • Rapidly increased investment spending in last four years obscures historical double digit FCF margins
  • 90% smaller than WMT as % of American economy leaves massive growth runway
  • Leader in four large industries: retail; retail exchange; books; cloud-computing
  • Amazon makes decisions that intentionally reduce income
  • Gross profit margins increasing faster obscure still massive growth rates
But this wouldn't have provided any evidence for why I believe these various items and I believe would clearly have been less productive for the forum.




Also, I have only been posting much for a few pages here and the actual consideration of AMZN as an investment has only really occurred in the past few as well, I believe.


This statement also continues to not really argue against anything I've said - it just attacks the thesis for what I'll call meta-reasons that aren't actually part of the thesis.

dwy000

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Re: AMZN - Amazon.com Inc.
« Reply #499 on: June 26, 2014, 10:34:21 AM »
JAllen - you have summarized where the two theses differ.

Your view is that they CHOOSE not to be profitable by reinvesting all profits back in the business but they will be highly profitable when they stop.

My thesis (or more accurately the opposing thesis) is that they have built up a business and cost structure whereby they cannot make that transition without killing the factors that have made them successful to date.  And importantly, they show no desire to make that transition - so even if true it's hard to base an investment thesis on something the company isn't supporting for the foreseeable future.

There is no way to prove either theory right or wrong except through time and experience.  I personally am not comfortable making a value investment without knowing those key factors.