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Timothy Phillips

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  • 1 More Reason To Hate Amazon's Valuation [View article]
    June retail sales this morning were not good.

    DOWN 0.1% ex Autos & Gas

    Internet retail up only 2.1% in June.

    Let's see if that stops the train that is Amazon. That is bad 3P comps for them and bad 1P data now for Q2.
    Jul 15 08:38 AM | Likes Like |Link to Comment
  • Is Amazon.com The New Wal-Mart? [View article]
    Peter Lynch calls what Amazon does "diworsification"
    Jul 15 06:43 AM | 2 Likes Like |Link to Comment
  • Is Amazon.com The New Wal-Mart? [View article]
    Hard to imagine they can get upgrades when 68% of analysts already have AMZN listed at buy/strong buy.

    When 68% of analysts are at buy/strong buy and the price has run massively to within 3% of the mean target price ($317), you can't get upgrades (or even maintain the buy rating) unless they increase the targets substantially (20% or so .. that would place target to around $380).

    And, you can't get that kind of move ($30B increase in market cap) without a massive increase in future financial projections (revs, earnings, cash flow). We know revenues will come in light based on channel advisor and consumer spending, so these estimates can't be raised. The GM% and CSOI have been played already to a point where future projections can't be increased further (that was used last 2 Q's).

    This will be interesting, as I would expect an attempt to raise targets, but what will it be based on? What a game.

    My guess: the potential accounting change (that Paulo discussed) will be enacted to move 3P e-book commissions to fully loaded revenue which increases revenues substantially, and lowers GM% (but keeps GM$ the same). Analysts will see this as a rekindling of revenue acceleration, up their forward estimates, and leave projected GM% nearly untouched (they will say Amazon will make it up in additional e-books and AWS margin they didn't account for in the past). This will allow them higher projected Cash FLow, and raise their targets on the same multiple.

    Of course it is BS (and incorrect), but it might work for another Q to keep the gains coming.
    Jul 14 08:48 AM | 1 Like Like |Link to Comment
  • Is Amazon.com The New Wal-Mart? [View article]
    Mark - on that point, I would say the odds favor an increase in target prices, as it has already begun prior to earnings. You bring up a key point though that analysts have Q2 as a decision point on how to proceed. If Q2 really disappoints, with the price so close to the targets, they will have a hard time being bullish (unlike last 9 Q's). Meeting or Beatings on revs, earnings and guidance will give all the cover analysts need to raise the multiple even further for CY14 and raise targets.
    Jul 14 08:31 AM | Likes Like |Link to Comment
  • Is Amazon.com The New Wal-Mart? [View article]
    Voiper613 - I wrote an article on the P/S analysis portion of your comment (http://seekingalpha.co...). As I write in the article, I am OK in valuing a company on a P/S basis during a lack of earnings and high growth if you believe the slump in earnings is planned and temporary.

    The question becomes, what is the correct P/S ratio for Amazon? My articles shows AMZN has been valued (and continues to be) on a 1.8x FWD revenue projection, while they should be valued somewhere in the range of 0.7 to 0.9 based on comparables and estimated financials. The rubber will meet the road on this at some point.
    Jul 14 08:17 AM | 1 Like Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    That's right Herb, the issue here is that the bubble is limited to only certain "risk-on" assets like AMZN - in fact so few assets, that the money is piling in quickly to just a few (AMZN, TSLA, LNKD, NFLX, etc..) that really creating a massive distortion while many good companies are left behind.

    When the FED, media, economists, etc. look at the market they see a forward P/E of 14.5 on the S&P500 which is a historically below average number. That provides cover for everything is happening. Now, the earnings forecasts for 2013 are really back-end loaded (double digit growth expectation), so while Q2 may not provide a knockout blow itself, it could lead to significant reductions in forward earnings if comments and forecasts don;t meet very high expectations. This could increase the market P/E to a point where those mentioned above become uncomfortable.
    Jul 14 08:09 AM | Likes Like |Link to Comment
  • ChannelAdvisor Data For Amazon In June Is Out, Conclusion Remains The Same [View article]
    RonK2 - thanks for bringing the coin flip story up. That about sums up the AMZN long position on this board ...
    Jul 13 08:05 AM | 1 Like Like |Link to Comment
  • ChannelAdvisor Data For Amazon In June Is Out, Conclusion Remains The Same [View article]
    There are two metrics they asked us to value them on: Annual Free Cash flow growth and ROIC (based on FCF, not earnings by their def. Here are the results for those two metrics over the last 6 Q's:

    FCF growth (2009/10/11/12): $2.9B, $2.5B, $2.1B, $0.4B
    ROIC (last 6Q's): 21.2%, 11.5%, 10.9%, 10.4%, 3.6%, 1.5%

    How does that not scare investors? The two metrics they manage the business to, are a complete disaster.
    Jul 12 02:13 PM | 2 Likes Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    the numbers do work out, but only very big funds can do it - that is why Cap World and Fido are biggest shareholders as they have the ability to make the market.
    Jul 12 02:03 PM | Likes Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    If you sell puts, you collect a premium as long as the stock closes above the strike. Given enough capital in a "low volume to float" stock, a price can be made to finish up above that strike on a weekly basis. You would them unload your underlying position at some point (or roll it to next week). The goal is to make more on the premium than you may lose in the underlying each week. In Amazon's case, it even appears you can make money on the underlying + premium almost every week as demand for shares remains (momo players).
    Jul 12 07:04 AM | Likes Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    Once it closed above the 5th wave completion at $292 it was going to move to the next nice round number quickly ... and quicky it did: 1 day! It will be interesting to see the battle at $300 ... a lot of shares moved today, 4M .. which tells me that there will be some profit taking here prior to earnings potentially .. let's see how much support she gets.
    Jul 11 06:59 PM | Likes Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    The manipulation I describe in comments above are legal. It simply requires enough money to move the stock and knowledge of the short/put positions each week. If you make more money in put premium than you spend net in the long trade, you win.
    Jul 11 06:56 PM | Likes Like |Link to Comment
  • 1 More Reason To Hate Amazon's Valuation [View article]
    NW - it does capital to risk assests, of which Amazon is a top Bill. So, it will not impact all stocks equally.
    Jul 11 06:54 PM | 1 Like Like |Link to Comment
  • Amazon.com Q2 2013 Earnings Preview [View article]
    Salerno - Target average is at $315, only 5% higher!!! ... they will all start raising targets if it holds through earnings. Finances be damned!
    Jul 11 03:02 PM | Likes Like |Link to Comment
  • ChannelAdvisor Data For Amazon In June Is Out, Conclusion Remains The Same [View article]
    Put volume is up significantly though .. that is what I think is driving the price higher. Allows for manipulation when coupled with low underlying volume.
    Jul 11 02:35 PM | 1 Like Like |Link to Comment
COMMENTS STATS
421 Comments
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