I had no idea about this. Makes sense actually.
Feel sorry for the companies they have squeezed out the market. I wonder what it will take to destabilise something as big as Amazon. I know in a few countries Amazon is not number one but it’s never far behind!
Actually, Amazon is not very big in most countries in the world (Africa, Asia). We just assume it is, because it’s so dominant in the US and some parts of Europe.
There’s big competition locally in Africa or China.
AWS is probably going to be more dominant globally and important over the next years/decade than the delivery service.
The democratisation of and lowering of the barrier to entry to selling online. Sellers will start to need a marketplace, like Amazon, less and less over time. Or the marketplace service will become more comoditised.
What value do they actually add? They have a platform to view many different products in one place and they also have warehouses to allow quick delivery. There’s no reason this couldn’t be more distributed over time. I could make an aggregator website for companies to sell their products that doesn’t take their data. Delivery costs will be reducing over time. You could have a collection service that picks up packages from multiple suppliers and ships them around, or use drones. This is how commercial delivery services work, like sending a single pallet somewhere.
It feels like Amazon is trying to protect themselves against the market place decreasing value add.
I like their innovation and expansion into what feels like everything! As a consumer it does worry me at times.
I don’t see Amazon’s core offering being crushed in the near future, even the new few years. I expect it will be more like Apple with selling devices and shifting to a service play. A slow shift which they do over multiple years, and some would argue while they are at the top of their game.
From the book The Future is Faster Than You Think.
Becoming a technology company is the key to survival and thriving in the future. Both Target and Walmart invested in their tech.
The US is home to all big technology companies, which explains why the S&P 500 and FTSE 100 go very different directions, despite dreadful economic data all around.
Just halfway through the book, but it gave me a lot of new ways to look at our world.
In other Amazon news I saw they gave more details about the Zoox robotaxi yeserday:
They were ranked 9th in Guidehouse’s automated driving leaderboard earlier this year, which seems to broadly align with how people view the state of play (even if it is a bit arbitrary, the groupings feels about right).
Buying up online companies that do well on Amazon, to create a kind of new online version of brands similar to the ‘Procter & Gamble’ / ‘Unilever’ model. That’s got growth & dividends written all over it.
I’m long AMZN, but how many of their new streaming customers quit after the free trial, after all their Christmas presents got delivered through Prime?
I’m on my 4th or 5th free Prime trial. I always cancel them before I have to pay and the always offer me another a few months later
AMZN has been stagnate for 6 month… if you think other stocks are too high, AMZN is a bargain.
How is Amazon a bargain with a PE of 100 and being the fourth largest company in the world by market cap already?
Thats just one way to “value” the co but we’re in a low interest rate environmnt.
They just spent $$ 40bn plus on capital expnditures and their ads (other revenue) went to the moon, and overall based on the earnings call AMZN is a GOAT. Own planes, warhouse robots, moon.
Amazon’s valuation isn’t as insane as it looks at face value, it’s basically pricing in ~5 years of large, but not unreasonable growth.
This piece basically shows you what assumptions are baked in to the current price. (Yes I know there are flaws in this model, but I think it’s still worth considering)
In short though if you think they can grow earnings to ~60bn by 2025 and then get a terminal p/e of ~30 (in line with peers) the current price is about right. I think the former assumption is probably safer than the later.
You may like this report–of course it’s by ARK so it’s free @Cameron
“Most at risk is the $2 trillion of public enterprise value in Luxury Goods, Footwear & Accessories, Apparel Retail, Specialty Retail, Department Stores, and Apparel Manufacturing”
Arcadia Group–the TOPSHOPs–are already getting absorbed by e-commerce like ASOS.
AMAZON owns ecommerce and SHOPIFY own non-AMAZONians who like to sell stuff, like the SpaceX merch store.
Valuation isn’t insance because it’s all relative
@Cameron, you post insightful stuff related to valuation. Any specific resources you would recommend for a noob wanting to learn more about this? Thanks in advance.