Investing

Amazon (AMZN)

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Mar 27, 2007
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dlhunter wrote: short 100 shares AMZN. Lets see who is right in 60 days
nice lot, gl


but quite honestly i'm already up quite a bit on amzn, it was an investment so i've had it for some time now... there's another amzn thread

amzn-1282798/
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Jun 27, 2007
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AMZN reports this Thursday. I'm looking at options and it's interesting how calls are much richer than puts. Reminds me AAPL prior to earnings... bulls losing control and complacent, or they know something (like AMZN opening warehouses on the moon for 30 min space delivery). LOL
Anyway, trade idea to buy OTM put spread and finance it with OTM short call (ie buy 380/375P and sell 435C for even).

Will have to hedge short stock position with short puts.
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Jun 27, 2007
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It's quiet in AMZN land! I suppose everyone busy buying cheap shares that are on sale. I ringed the register today on my short, nice 50 points bonus out of overvalued company with slowing revenue growth. Ouch, it's actually scary, longs! They make few $c/share, yet command unbelievable PE. Walmart in disguise, priced like YHOO in 1999!

I'll be looking to short in again after it rises from dead.
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Talking to yourself?
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lol. he's happy. he was shorting the stock. let him enjoy his moment :D
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dlhunter wrote: It's quiet in AMZN land! I suppose everyone busy buying cheap shares that are on sale. I ringed the register today on my short, nice 50 points bonus out of overvalued company with slowing revenue growth. Ouch, it's actually scary, longs! They make few $c/share, yet command unbelievable PE. Walmart in disguise, priced like YHOO in 1999!

I'll be looking to short in again after it rises from dead.
I just put 10k into AMZN yesterday. Perfect buying opportunity.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
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brunes wrote: I just put 10k into AMZN yesterday. Perfect buying opportunity.
Even though I think you're flushing your money down the drain in a company that doesn't have a meaningful proprietary advantage in any line of business they conduct, and doesn't really make any money and probably never will -- I gotta hand it to you for having conviction in your beliefs.
What is your investment thesis, brunes? Do you think they will gain so much online market share that they will someday have pricing power and earnings will follow? How is it different from pets.com?
Even if they do gain online market share, just how difficult is it, really, to get into the game? People only shop at Amazon, Amazon only sells their cloud services, because they're dirt cheap, not because running Linux on some rented computer is a particularly unique or proprietary service. They're also vulnerable to a revulsion to centralized/outsourced computing.
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Anonymouse wrote: What is your investment thesis, brunes? Do you think they will gain so much online market share that they will someday have pricing power and earnings will follow? How is it different from pets.com?
Well, for starters Amazon has sales and revenue? Comparing it to Pets.com is just stupid so I won't waste time there.

As for my thesis, my main thesis is that while they will keep razor-thin margins in their retail store, it will increasingly not matter because of the growth rate of AWS. AWS alone is around a 3+ billion dollar business all by itself (around 10% of Amazon's revenue) and growing at a rate of 60% a year, and is a highly profitable business. Amazon is still crushing all it's competitors in this arena.. Google and IBM and others are playing catch-up.

Related to their retail arm, I also feel like the street does not understand the culture of Amazon Prime buyers. Amazon prime subscribers spend an ENORMOUS amount of money at Amazon and thus it is part of their lifestyle. Amazon is not going to lose subscribers by upping the price by $20 or $30 a year because they have literally no competition these people could switch to with a simmilar "all you can eat" online shopping with rock-bottom prices. The vast majority will stay (heck if they plow that revenue into investment in more original productions, they might get MORE subscribers), and in return they will have a lot more subscriber revenue.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
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Anonymouse wrote: So, you are justifying a P/E that is 37 times the S&P 500 average on the basis of a cloud computing hobby? This hobby exists because they can't make money to save their lives on their main business, which is the second business they have tried after books, which they also can't make money on.
Right now, the shareholders are giving them permission to make almost no money. That permission is going to be withdrawn sooner or later.
Yeah, I don't understand it. They're a leader in basically no business they operate in. The whole thing reminds me of a class clown that all the girls love who has ADHD and is "funny", but the guy is unfocussed and can't really accomplish much of anything gainful.

The claim that they're in any sort of competition with Google or IBM is laughable.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Anonymouse wrote: So, you are justifying a P/E that is 37 times the S&P 500 average on the basis of a cloud computing hobby? This hobby exists because they can't make money to save their lives on their main business, which is the second business they have tried after books, which they also can't make money on.

Right now, the shareholders are giving them permission to make almost no money. That permission is going to be withdrawn sooner or later.
Lets come back later and see.

Oh and cloud computing is anything but a "hobby", you need to read up on the subject.
rodbarc wrote: Interesting article justifying Amazon valuation considering its Operating Cash Flow:

http://www.fastgraphs.com/_blog/Researc ... lain-amzn/

Rod
Yep. This is exactly what I said previously on this topic a few months ago. Yes, earnings are important. But so is revenue. Amazon has INSANELY high revenue and the growth has no end in sight.. yes they "missed" this quarter but still, look at the YoY revenue growth. Is Walmart growing like that? Target? Any other retailer? No. So where is that growth coming from? The other guy's bottom line, that is where. And some day, AMZN will just decide it's big enough to start making profit, flip the switch, and the size of earnings coming in will be like Niagara falls, because its operating costs compared to these other guys are so much lower.

Also for the record, I feel like a lot of people on RFD have a skewed view of Amazon because you are honestly not exposed to what Amazon.com shoppers are like in the USA. I know people in the US who probably buy 50% or more of everything they consume on Amazon. They buy groceries, toiletries, everything. When you have Prime and it is all free shipping right to your doorstep, and the cost is 10%-25% below Walmart why would you NOT do this? These people are addiciated to Amazon and Prime - and honestly the number of them is constantly growing not shrinking.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
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Mark77 wrote: Even though I think you're flushing your money down the drain in a company that doesn't have a meaningful proprietary advantage in any line of business they conduct, and doesn't really make any money and probably never will -- I gotta hand it to you for having conviction in your beliefs.



Even if they do gain online market share, just how difficult is it, really, to get into the game? People only shop at Amazon, Amazon only sells their cloud services, because they're dirt cheap, not because running Linux on some rented computer is a particularly unique or proprietary service. They're also vulnerable to a revulsion to centralized/outsourced computing.
ummm most people have conviction in their beliefs.

I am getting the notion that you don't have conviction in your beliefs.

Is that why you didn't buy BBRY during their $30 a share price or ABX at their $30 a share price?
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techcrium wrote: ummm most people have conviction in their beliefs.
Well technically I guess I am long Amazon, so you got me there. Now go figure out how much Amazon is in $300 worth of the TD e-Series S&P500 index fund.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Mark77 wrote: Well technically I guess I am long Amazon, so you got me there. Now go figure out how much Amazon is in $300 worth of the TD e-Series S&P500 index fund.
Yes thanks for the humor. What a comic. I'm sure everyone laughed reading your posts...

Anyways, how about you discuss your conviction for seeing ABX or BBRY as undervalued?

Are you investing based on your beliefs?

Can you discuss that?
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brunes wrote: Yep. This is exactly what I said previously on this topic a few months ago. Yes, earnings are important. But so is revenue. Amazon has INSANELY high revenue and the growth has no end in sight.. yes they "missed" this quarter but still, look at the YoY revenue growth. Is Walmart growing like that? Target? Any other retailer? No. So where is that growth coming from? The other guy's bottom line, that is where. And some day, AMZN will just decide it's big enough to start making profit, flip the switch, and the size of earnings coming in will be like Niagara falls, because its operating costs compared to these other guys are so much lower.

Also for the record, I feel like a lot of people on RFD have a skewed view of Amazon because you are honestly not exposed to what Amazon.com shoppers are like in the USA. I know people in the US who probably buy 50% or more of everything they consume on Amazon. They buy groceries, toiletries, everything. When you have Prime and it is all free shipping right to your doorstep, and the cost is 10%-25% below Walmart why would you NOT do this? These people are addiciated to Amazon and Prime - and honestly the number of them is constantly growing not shrinking.
Yep, Wallmart is worried for a reason. Very few business have the power to threaten such a giant.

Rod
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rodbarc wrote: Yep, Wallmart is worried for a reason. Very few business have the power to threaten such a giant.
For starters, Amazon's prices are nowhere near those of Wal-Mart on the everyday sort of goods that Wal-Mart sells -- they're considerably higher and there is no savings. Secondly, despite all that, Amazon still doesn't make money and destroys shareholder value quarter after quarter. Wal-Mart worried? Hardly, they're laughing at just how little business sense the Amazon people have.

From personal experience, I can tell you that the Amazon shopping website is hideous. I am in the process of ordering $1000 worth of stuff (mainly car parts, antennas, cast iron cookware, and a few computer parts) delivered to an Arizona address, and every time I go on there and tinker with my shopping cart, its popping up messages about changing suppliers, stuff going out of stock, begging me to order within the next hour, etc. And it takes quite a bit of work to determine which product will give me the lowest delivered cost. Oh, and the website is just ugly.
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Mark77 wrote: For starters, Amazon's prices are nowhere near those of Wal-Mart on the everyday sort of goods that Wal-Mart sells -- they're considerably higher and there is no savings. Secondly, despite all that, Amazon still doesn't make money and destroys shareholder value quarter after quarter. Wal-Mart worried? Hardly, they're laughing at just how little business sense the Amazon people have.

From personal experience, I can tell you that the Amazon shopping website is hideous. I am in the process of ordering $1000 worth of stuff (mainly car parts, antennas, cast iron cookware, and a few computer parts) delivered to an Arizona address, and every time I go on there and tinker with my shopping cart, its popping up messages about changing suppliers, stuff going out of stock, begging me to order within the next hour, etc. And it takes quite a bit of work to determine which product will give me the lowest delivered cost. Oh, and the website is just ugly.

Yet you still order from them. There must be some reason for that?

Also, any smart business worries about their competition. If they don't worry about them now they will be worrying about them as they get passed and left behind. I'm sure this is exactly the type of mentality a company like Blackberry had when they were in their prime. Look how well that's turned out.

I'm not sure where things go with Amazon but I do feel that anything is possible. How many people 15-20 years ago ever thought of buying stuff without leaving their house. Look where we are now and think what may be possible in the future.
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WhoCanDeal wrote: Yet you still order from them. There must be some reason for that?
Sure, nobody else can get me the products to the door cheaper. I am effectively taking advantage of the fact that Amazon's investors are giving Amazon use of their capital essentially for no return.

Would I deal with Amazon if they weren't the cheapest? If they had to price themselves in such a way that they delivered a return for their shareholders? Probably not. But while the subsidy exists, I'm glad to take it.

The Canadian version of Amazon, BTW, is a complete joke. Its rather interesting that they're willing to lose all sorts of money in the US, but not in Canada where they aren't really competitive in any segment.

I'm not sure where things go with Amazon but I do feel that anything is possible. How many people 15-20 years ago ever thought of buying stuff without leaving their house. Look where we are now and think what may be possible in the future.
Mail order has been around for many decades. Heck, even Sears and the Hudson's Bay company were doing it at least 50+ years ago. Now both firms are pretty much relegated to the ashbins of history, for the simple fact that neither of them could figure out how to make money on it.
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Mark77 wrote: Sure, nobody else can get me the products to the door cheaper. I am effectively taking advantage of the fact that Amazon's investors are giving Amazon use of their capital essentially for no return.

Would I deal with Amazon if they weren't the cheapest? If they had to price themselves in such a way that they delivered a return for their shareholders? Probably not. But while the subsidy exists, I'm glad to take it.
So you basically admit to buy from Amazon because they are the cheapest. Isnt that the whole point of their business model? Isn't that the same reason why people flock to Walmart's low prices?

You are directly feeding into the reason why so many people value Amazon so highly despite what seems to be common sense. As long as there are plenty of holier then thou Mark77s around who despise Amazon but are the first in line to get some savings (so much so that they will use an address outside their country), Amazon will remain a viable and highly sought after investment.
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Firebot wrote: So you basically admit to buy from Amazon because they are the cheapest. Isnt that the whole point of their business model? Isn't that the same reason why people flock to Walmart's low prices?
Usually the business model of a business is to....make money. Amazon has had what, 20 years? You think they would have figured it out by now. But they haven't, despite the business of online sales hitting records in terms of volume and sales.

Amazon's investors think there's this magic 'switch' to profits they can flick. The problem is, once Amazon starts raising the prices, the competitors will start coming out of the woodwork since the barriers to entry in Amazon's business lines are so low. That's why businesses such as this are not worth P/E = a gazillion. They're worth, at best, 15-30X earnings. Amazon should be returning capital, profits, to shareholders after 20 years of being in business. Not just papering over the world with more shares.

IMHO, a business that can't make money after 20 years, with demand increasing for their product on basically an exponential basis, and the aid of all of the automation/computerization in the world, and the apparent efficiencies that Amazon brings to the table -- isn't a business, its a hobby.
You are directly feeding into the reason why so many people value Amazon so highly despite what seems to be common sense. As long as there are plenty of holier then thou Mark77s around who despise Amazon but are the first in line to get some savings (so much so that they will use an address outside their country), Amazon will remain a viable and highly sought after investment.
I don't despite Amazon. I'm buying $1000 worth of stuff off of them. The issue is, what's good as a consumer, isn't necessarily good as an investment. Just like with strippers, lots of people like to go to watch them, but very few would want to enter into an actual relationship with them if the chance were ever to be available.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...

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