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  • Amazon's Margin Myth: Sleight Of Hand [View article]
    Let me play with your numbers a bit, Paulo, just to see what is built into valuation today. With COST at a 3% operating margin and WMT at 6%, and the logistics players at 4-7%, I will use a 7% operating margin for AMZN in 2020 assuming that growth has slowed and they are trying to make money at that point. Using Paulo's revenue estimate of $163 bn in 2020, a 7% operating margin yields $11.4 bn operating profit and $6.85 bn after tax. With 495 mm shares, that is $14 eps.

    So investors today are assuming that AMZN will grow rapidly, earn better margins than the most efficient players in the market today, and because of this view they are willing to pay 19-20X earnings that may or may not occur 7 years in the future? Seems like an unlikely way to make money.
    Feb 7, 2013. 10:40 AM | Likes Like |Link to Comment
  • Amazon's Margin Myth: Sleight Of Hand [View article]
    Paulo, do you think the 3P ends up being a logistics type of business? If so, operating margins for players like CH Robinson, Hub Group, etc are only 4-7%. Not that great. What operating margins are you baking into your model? How do you look at the 1P operating margins vs. the 3P margins?
    Feb 7, 2013. 02:40 AM | Likes Like |Link to Comment
  • A Look Into The New And Improved Estimates [View article]
    An interesting look at Amazon's 3P performance, just fyi:
    Feb 5, 2013. 01:22 AM | Likes Like |Link to Comment
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