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Oct 30, 2013
291 posts
34 upvotes
GTA
Amazon: Q4 EPS of $1.00 misses by $0.56.

Revenue of $35.75B (+21.9% Y/Y) misses by $180M.Expects Q1

revenue of $26.5B-$29B (+17-28% Y/Y) vs. a $27.65B consensus.

Expects Q1 op. income of $100M-$700M vs. $255M a year earlier.

Guidance assumed $600M in stock-based compensation.

Currently 13% down.

Done, another huge stock burns with week.
Deal Addict
Jan 3, 2013
1999 posts
268 upvotes
Sidney
GreyMatter22 wrote:
Jan 28th, 2016 4:43 pm
Amazon: Q4 EPS of $1.00 misses by $0.56.

Revenue of $35.75B (+21.9% Y/Y) misses by $180M.Expects Q1

revenue of $26.5B-$29B (+17-28% Y/Y) vs. a $27.65B consensus.

Expects Q1 op. income of $100M-$700M vs. $255M a year earlier.

Guidance assumed $600M in stock-based compensation.

Currently 13% down.

Done, another huge stock burns with week.
Ouch, that's nuts. Bounce tomorrow or continue downwards?
Deal Addict
Jan 3, 2013
1999 posts
268 upvotes
Sidney
GreyMatter22 wrote:
Jan 28th, 2016 4:43 pm
Amazon: Q4 EPS of $1.00 misses by $0.56.

Revenue of $35.75B (+21.9% Y/Y) misses by $180M.Expects Q1

revenue of $26.5B-$29B (+17-28% Y/Y) vs. a $27.65B consensus.

Expects Q1 op. income of $100M-$700M vs. $255M a year earlier.

Guidance assumed $600M in stock-based compensation.

Currently 13% down.

Done, another huge stock burns with week.
Wait, on my screen AMZN is up 9%. ??
Deal Addict
Jan 3, 2013
1999 posts
268 upvotes
Sidney
Jon Lai wrote:
Jan 28th, 2016 6:00 pm
You're looking at today's price. Earnings were released after hours - after hours currently 551.52 (-13%)
OUCH! Likely won't even be able to participate in the bounce tomorrow then. :(
Deal Addict
Feb 4, 2015
4541 posts
1415 upvotes
Canada, Eh!!
This is like their reports from couple of years before Bezos decided to show he could make a profit if want... anyone listen to CC? Have they gone back to more investing back into the company? Can't believe increased shipping costs caused the miss.
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Jan 29, 2008
634 posts
92 upvotes
Amazon crushed the latest Q.

Prime is making a killing. In the US, there is prime now (delivered within 2 hours), prime fresh (fresh food), prime video (now the biggest threat to Netflix), and who knows what's on the horizon.

Devices like Fire and Echo are low cost and very popular. I don't think amazon makes much money from these devices, it's more the services/products they help to sell.

AMS is a cash cow and growing fatter by the minute

Amazon trucks. Did you see one yet? I had something delivered to me by an amazon truck the other day. A more efficient delivery fleet could easily put Canadapost, UPS etc out of business. They even bought a fleet of 747's recently.

Drones on the Horizon. Delivery in 30 minutes or less. Pending regulatory approvals of course.


Long story short, Bezos put ALL of the revenue into the business for it to grow, and we're finally beginning to see it pay off. I expect Amazon to be the biggest business in the world in less than 5 to 10 years. Bigger than Apple, bigger than Google.

Shares of Amazon.com (AMZN) are up $62.30, over 10%, at $664.30, in late trading, after the company this afternoon reported Q1 revenue and profit that easily topped analysts’ expectations, and forecast this quarter’s revenue as much as $2 billion higher than the Street’s average estimate.

Revenue in the three months ended in March rose 28%, year over year, to $29.1 billion, yielding EPS of $1.07 per share.

Analysts had been modeling $27.99 billion and 58 cents a share.

Operating income in the quarter was $1.1 billion, up from $255 million a year earlier. The Street had been modeling $567 million.
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Sep 23, 2014
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Shady_Dealer wrote:
May 2nd, 2016 11:39 pm
Amazon crushed the latest Q.

Prime is making a killing. In the US, there is prime now (delivered within 2 hours), prime fresh (fresh food), prime video (now the biggest threat to Netflix), and who knows what's on the horizon.

Devices like Fire and Echo are low cost and very popular. I don't think amazon makes much money from these devices, it's more the services/products they help to sell.

AMS is a cash cow and growing fatter by the minute

Amazon trucks. Did you see one yet? I had something delivered to me by an amazon truck the other day. A more efficient delivery fleet could easily put Canadapost, UPS etc out of business. They even bought a fleet of 747's recently.

Drones on the Horizon. Delivery in 30 minutes or less. Pending regulatory approvals of course.


Long story short, Bezos put ALL of the revenue into the business for it to grow, and we're finally beginning to see it pay off. I expect Amazon to be the biggest business in the world in less than 5 to 10 years. Bigger than Apple, bigger than Google.
If i am not mistaken, amazon is really trying to cut the delivery middle man altogether with recent lease of cargo planes etc.
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traderjay wrote:
May 3rd, 2016 12:28 am
If i am not mistaken, amazon is really trying to cut the delivery middle man altogether with recent lease of cargo planes etc.
Very much so. I recently bought a few packs of toilet paper from amazon, and some laundry detergent etc. It was cheaper than Walmart, and they shipped it for free (over $25). Got here in two days, the UPS guy carried this HUGE box over his shoulders and delivered it to my doorstep. I imagine if I were to ship something that size with UPS it would cost more than $50. Amazon must be getting a good deal from UPS but it can't be THAT much cheaper. So they probably made very little if any money from that transaction. It makes a lot of sense for them to buy up some trucks for delivery in the short term, they are probably 1000 times more efficient at managing a fleet of delivery trucks.

For those who's never heard of amazon drones, I believe video below is how everyone will shop in the (very) near future.
Deal Addict
Feb 26, 2017
1123 posts
832 upvotes
I re-opened this thread as I'm thinking of starting a small long term position in Amzn in my TFSA. I'll have some new funds in mid June and if I do buy AMZN it would be roughly 2% of my total investments.

I feel like I'm pretty late to the party with Amzn (even this year its up over 30%). I've used fast graphs to look at company from a Operating Cash Flow point of view (P/E is almost useless as they are not aiming for profits right now). It looks like it is about 10% overvalued from a cash flow perspective. From Fastgraphs their normal P/OCF is 23.2 while it is currently at 25.4. From their growth rate I still think this could be a good investment.

Is there any risk I'm not thinking about? I'd like to get some other opinions to see if I'm missing anything.
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Dec 14, 2010
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Chance7652 wrote:
Jun 1st, 2017 9:02 am
I re-opened this thread as I'm thinking of starting a small long term position in Amzn in my TFSA. I'll have some new funds in mid June and if I do buy AMZN it would be roughly 2% of my total investments.

I feel like I'm pretty late to the party with Amzn (even this year its up over 30%). I've used fast graphs to look at company from a Operating Cash Flow point of view (P/E is almost useless as they are not aiming for profits right now). It looks like it is about 10% overvalued from a cash flow perspective. From Fastgraphs their normal P/OCF is 23.2 while it is currently at 25.4. From their growth rate I still think this could be a good investment.

Is there any risk I'm not thinking about? I'd like to get some other opinions to see if I'm missing anything.
AMZN is a unique case, since they even choose to not have a profit (while they could have a profit any time they want). I've been using operating cash flow since I started a position about 2 years ago and considering them as a growth stock (the same way that I hold FB, GOOGL and NOW). Price and P/E are not useful metrics here, but I believe OCF is, since they reinvest every penny they generate.


Rod
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May 22, 2003
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I've been looking for an entry point in AMZN for awhile now...it just keeps going up! Might have to just suck it up and buy (like Dollarama)
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Feb 26, 2017
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rodbarc wrote:
Jun 1st, 2017 9:18 am
AMZN is a unique case, since they even choose to not have a profit (while they could have a profit any time they want). I've been using operating cash flow since I started a position about 2 years ago and considering them as a growth stock (the same way that I hold FB, GOOGL and NOW). Price and P/E are not useful metrics here, but I believe OCF is, since they reinvest every penny they generate.


Rod
Thanks Rod that's good feedback. I think the biggest factor will be the accuracy of the OCF forecasts for the next two years. This is one of those stocks I wish I bought earlier. Even at the current price I'm still thinking it makes sense to start a position (it just needs to not go up too much for the next two weeks).
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Oct 6, 2015
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rodbarc wrote:
Jun 1st, 2017 9:18 am
AMZN is a unique case, since they even choose to not have a profit (while they could have a profit any time they want).
Just how could they choose to have a profit? Isn't the goal of every business to maximize profits? Just because they're turning their investment into cash (while depleting their investment at roughly the same rate) does not make for a business that can magically just choose to have a profit. The real implication here is that Amazon is only minimally profitable, if even, and they can't generate a profit without destroying their pricing advantage over the competition.

The other elephant in the room is that Amazon's employees are highly paid in stock. If their stock loses a lot of value, morale will plunge. I remember Nortel when there were apparently office pools as to who could invest the most of their salary into the employee stock program. When the Nortel bubble burst, there were large numbers of rather butthurt employees at all levels in the organization. Divorces and suicides.
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burnt69 wrote:
Jun 2nd, 2017 2:05 am
Just how could they choose to have a profit? Isn't the goal of every business to maximize profits? Just because they're turning their investment into cash (while depleting their investment at roughly the same rate) does not make for a business that can magically just choose to have a profit. The real implication here is that Amazon is only minimally profitable, if even, and they can't generate a profit without destroying their pricing advantage over the competition.

The other elephant in the room is that Amazon's employees are highly paid in stock. If their stock loses a lot of value, morale will plunge. I remember Nortel when there were apparently office pools as to who could invest the most of their salary into the employee stock program. When the Nortel bubble burst, there were large numbers of rather butthurt employees at all levels in the organization. Divorces and suicides.
Amazon has a huge empire, made of different businesses. Traditional metrics for mature companies (net income, operating earnings) will look terrible because they are the wrong metrics. Amazon has been growing aggressively for 20 years and it continues to grow. Hence revenue and operating cash flow are better measures, for most growing companies by the way. Notice how Amazon focus (and obsession) is on the client side and how their quarterly results are focused on sales. Their businesses are delivering very rapid revenue growth but not accumulating any surplus cash or profits, because every penny of cash is being put back into expanding the business further. But, this is not because any given business runs permanently at a loss - it is because the profits from what is already there are spent on making new businesses. In the past, that was mostly in operations, but in recent years the investment firehose has again been pointed at capex - look at the gap and trend between operating cash flow and free cash flow. AMZN cost doesn't grow at the same pace as their revenue - it actually has been declining with all their AI investments for better efficiencies - that alone allows them to make a profit anytime. But that's not AMZN's goal.

Jeff Bezos'w view has always been to keep investing, because to take profit out of the business would be to waste the opportunity. This is very clear on their first 1997 Letter to Shareholders, when he was stating AMZN goals: "When forced to choose between optimizing appearance of our GAAP accounting and maximizing the present value of future cash flow, we'll take the cash flows." It also reads (and reinforced by their latest letter to shareholder as well): "we will balance our focus on growth with emphasis on long-term profitability and capital management. At this stage, we choose to prioritize growth because we believe that scale is central to achieve the potential of our business model."

Nortel was very different. They were growing by acquiring companies with no earnings because these companies couldn't generate any and they had no growing operating cash flow or free cash flow, making a fundamental difference.

Lastly, divorce and suicide was from those that didn't diversify and panicked by not understanding that investing is a business, and therefore, there will be losses at times. Greed and fear will always be the reason why someone's portfolio can be permanently impaired - and that has nothing to do with the risks of any business by itself.


Rod
Build a comprehensive portfolio based on Investing and Trading strategies. Check out these threads and join the discussion:

Investing strategy based on dividend growth

Trading strategy based on Graham principles.

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