The End Of The Second Great Gold Rally [View article]
Pundit,
I am sorry, but I have not found any substantial argument in your piece to support your thesis that the current gold rally ended.
In your article you provide brief description of historic gold market. You align the major trends with "easy" and "tight" money periods. Then, you claim that the current rally ended. You did not provide any ground or explanation for such claim.
Presumably, the current rally should have ended because the long period of "easy" money ended. If it is the case, you should provide the explanation why do you think so. To compare current transition period with the previous one in 80s, you should have provided at least some numbers in terms of changes in nominal rates, real rates and inflation back then and now, for the US and major international markets.
Do you expect the global real rates to go sharply positive any time soon? Why? Do you expect all the QE programs to be halted and reversed? With the current government deficit projections both in the US and globally, do you expect the rates to go up for a long period of time (as with previous "tight" money - for 30-40 years?). Please, provide any numbers to support your thesis.
Being serious researcher, you, like all the idiotic gold bugs you jest at, come up with the target price of gold of $1000. Any ground for this claim? Any model, or, at least, logical construct? My feeling is, by publishing this, you are putting yourself in the same territory of unfounded claims.
If Amazon Is So Overvalued Why Does Google Want To Be Like It? [View article]
Are you serious when asking this question? This is investing 101!
Explanation - a line of business at AMZN is valued currently at trailing P/E 100x, or forward P/E 45x. GOOG is valued at forward P/E of 15x. The business line unquestionably good but hugely overvalued, the fair value would be forward P/E of 25x. By adding this business line, GOOG is expanding its combined multiple and increases its valuation. Right move! And it still means that AMZN is hugely overvalued.
ChannelAdvisor Predicts Direction Of Amazon Revenue Growth 100% Of The Time [View article]
Good research, thank you. If you noticed, there are many postings published recently on this subject. Quite interesting, if you follow them, they appear to be circular and without merit/factual proof of what they claim. Looks like shameless pumping to me, the only question is who's doing it....
Kindle Is The Fire That Burns Brightest For Amazon.com [View article]
"Could be Robert".... Wonderful! You take one person - yourself, and extrapolate your habits to 100% of US population. But what about me? I, for example, love to go to BN, drink coffee and browse through books. Does it mean in 9 years 100% of books sales would belong to BN? Not really. And if i buy e-book from Amazon and read it on my iphone? Meaning Kindle share going to zero? The assumptions for the analysis should be realistic to make the analysis at least worth reading.
Morgan Stanley's Ever-Changing Amazon.com Bullish Story [View article]
Paulo,
Thank you for the article. Many people do not have access to this garbage, only to it's headlines, or executive summary. And many, who has access, do not read it for obvious reasons, and need to be pointed to such hilarious stuff.
One Truth About Amazon (That You Probably Didn't Know) [View article]
An interesting piece, thank you.
You mentioned that increased conversion would increase revenues growth, which is correct. What you failed to mention, though, is what viable ways to increase conversion you think are appropriate to not just increase revenue growth, but also to improve bottom line. It is quite easy to increase revenues, and also to increase revenues growth rate, especially online. All it takes, is to sell something cheaper than everybody else. Being devoted AMZN customer, I find many things there to be the cheapest, based on combination of price, delivery cost, and sales tax. Yet, what on Earth would compel me to buy there something, which i can find to be cheaper on other online sites, or to be the same price in the store right next to me? Usually, 5 minutes search gives you most of available options, and, please, do not tell me many customers would abandon checking Google Shopping because they so like AMZN logo. There are several trends in play now, besides sales taxation, that are adverse to AMZN, and just got reinforced by the taxation, and delivery issues. First is simple and plain economy of scale. AMZN is still (and may be forever) behind WMT and Target in this regard. Recently, I found myself buying more and more basic stuff on walmart.com because the prices are cheaper, and taxation+delivery are the same. Can AMZN beat WMT here? I strongly doubt it. What would compel me to buy more expensive stuff on AMZN (aka increased conversion)? I do not know... Second, is "AMZN price matching", done now by some (Target and Best Buy). I strongly believe this practice to become permanent and much more widespread, as it reflects not only competition strategy, but also a trend for many brands to control prices and to provide price uniformity. So, if a TVset will have the same price on AMZN and WMT/Best Buy, where do you think I would buy it? Third, that actually comes along with second, is establishment of "private" brands and products which are sold only at specified retailers. No comments here. Fourth, is almost perfect easiness, with which I can compare prices online, and choose the cheapest, go directly there, and buy. That's lwhy the conversion rate of some online retailers will always be higher than AMZN's.
So, given these trends, it is quite hard, if not impossible, for AMZN to increase conversion in the ways beyond old and quite knows by far - to cut prices even more! Does it have room for this? I strongly doubt it has any room "organically" as the margins are already non-existent. Of cause, it can always sell below cost, but this strategy has limits (cash on BS), and there is no chance AMZN will win this fight with WMT.
This is my thought on it. I may be missing some important part, or do not know of some innovative market strategy. If anybody knows how AMZN can increase conversion, please, share this knowledge with me.
A Valuation Model For Those On A Tight Schedule [View article]
Paulo,
Why did you omit EBAY?
To be more precise, AMZN should be a mix of PCCC (BN, BBY, WMT), EBAY, and something like CRM, based on revenue % of each main business line (net margin % contribution is meaningless, as we have no clue how to calculate it).
Following Mr. Market Into Amazon: Suicidal Or Sensible? [View article]
Marc,
From your numerous pieces on AMZN i assume you are still rather bullish on the story. Do you have any timeline/metrics/valua... development in mind regarding AMZN, which might change your vision at some point in the future, and move you to Paulo's camp? For example, in 5 years still seeing it trading at 300x with sales growth slowing to zero?
I read the piece you referred to in the first paragraph. I have not seen the detailed and conlusive margin analysis there, besides stating the fact that previously AMZN was able to generate "normal" margins for its business. If you need an example that past performance does not guarantee future, just look at RIMM.... For clarity and brevity, let's omit everything not related to margins, like share price targets and Bezos qualities. First of all, you did not quite address margin issues in the previous piece, nor in this one. You mention increased investments as the reason for margin decline, not providing sufficient evidence, and not using right comps. Mentioning B&N as comp is not correct. It might have been the case 6 or 7 years ago, but now AMZN business is way beyond that of B&N. Two closest comps as of now (not including cloud) would be EBAY and WMT. To understand "heavy investments effect" on margins we need to look at the growth phase of WMT. It is quite evident it invested a lot in the infrastructure and people during those times. Yet, it was able to maintain healthy margins. Please, provide your arguments against it if you disagree. Secondly, EBAY case clearly shows how to maintain healthy margins and growth in online commerce. What we all clearly see and agree upon right now, is that AMZN margins deteriorated recently. Whether it is because of "heavy (mal)investments" or wrong stuff sold at wrong price, we do not know, as AMZN discloses little. (a good point here is the better a company performs, the more it discloses). The key question is whether it will be able to restore normal margin while maintaining high growth rate. I do not see the answer to it as of now. If you do, and care to discuss, please provide factual material info proving your point of view.
Marc, You published a detailed info on historic margins for WMT and for AMZN, and now you are stating that there is no reason to debate margin issue any further. Why then did you publish the data? Why did you call your piece "Truth about margins..."? If you believe the issue is resolved, why to return to it? And if it is not resolved, why are you refusing to discuss it? I did not question your conclusions, all I mentioned is that addition of sales growth would give better understanding of WMT growth dynamic versus AMZN's. If you disagree, please explain why.
Figure 1 is very good indeed. What you missed though, is sales growth numbers for both companies. If you add those, you would be quite surprised - WMT was able to grow its sales quite effectively, building all retail/distribution infrastructure, hiring a lot of people, and yet it did not compromize net margins....
The End Of The Second Great Gold Rally [View article]
I am sorry, but I have not found any substantial argument in your piece to support your thesis that the current gold rally ended.
In your article you provide brief description of historic gold market. You align the major trends with "easy" and "tight" money periods. Then, you claim that the current rally ended. You did not provide any ground or explanation for such claim.
Presumably, the current rally should have ended because the long period of "easy" money ended. If it is the case, you should provide the explanation why do you think so. To compare current transition period with the previous one in 80s, you should have provided at least some numbers in terms of changes in nominal rates, real rates and inflation back then and now, for the US and major international markets.
Do you expect the global real rates to go sharply positive any time soon? Why? Do you expect all the QE programs to be halted and reversed? With the current government deficit projections both in the US and globally, do you expect the rates to go up for a long period of time (as with previous "tight" money - for 30-40 years?). Please, provide any numbers to support your thesis.
Being serious researcher, you, like all the idiotic gold bugs you jest at, come up with the target price of gold of $1000. Any ground for this claim? Any model, or, at least, logical construct?
My feeling is, by publishing this, you are putting yourself in the same territory of unfounded claims.
If Amazon Is So Overvalued Why Does Google Want To Be Like It? [View article]
Explanation - a line of business at AMZN is valued currently at trailing P/E 100x, or forward P/E 45x. GOOG is valued at forward P/E of 15x. The business line unquestionably good but hugely overvalued, the fair value would be forward P/E of 25x. By adding this business line, GOOG is expanding its combined multiple and increases its valuation. Right move! And it still means that AMZN is hugely overvalued.
ChannelAdvisor Predicts Direction Of Amazon Revenue Growth 100% Of The Time [View article]
Kindle Is The Fire That Burns Brightest For Amazon.com [View article]
The assumptions for the analysis should be realistic to make the analysis at least worth reading.
Morgan Stanley's Ever-Changing Amazon.com Bullish Story [View article]
Thank you for the article. Many people do not have access to this garbage, only to it's headlines, or executive summary. And many, who has access, do not read it for obvious reasons, and need to be pointed to such hilarious stuff.
One Truth About Amazon (That You Probably Didn't Know) [View article]
You mentioned that increased conversion would increase revenues growth, which is correct.
What you failed to mention, though, is what viable ways to increase conversion you think are appropriate to not just increase revenue growth, but also to improve bottom line.
It is quite easy to increase revenues, and also to increase revenues growth rate, especially online. All it takes, is to sell something cheaper than everybody else. Being devoted AMZN customer, I find many things there to be the cheapest, based on combination of price, delivery cost, and sales tax. Yet, what on Earth would compel me to buy there something, which i can find to be cheaper on other online sites, or to be the same price in the store right next to me? Usually, 5 minutes search gives you most of available options, and, please, do not tell me many customers would abandon checking Google Shopping because they so like AMZN logo.
There are several trends in play now, besides sales taxation, that are adverse to AMZN, and just got reinforced by the taxation, and delivery issues.
First is simple and plain economy of scale. AMZN is still (and may be forever) behind WMT and Target in this regard. Recently, I found myself buying more and more basic stuff on walmart.com because the prices are cheaper, and taxation+delivery are the same. Can AMZN beat WMT here? I strongly doubt it. What would compel me to buy more expensive stuff on AMZN (aka increased conversion)? I do not know...
Second, is "AMZN price matching", done now by some (Target and Best Buy). I strongly believe this practice to become permanent and much more widespread, as it reflects not only competition strategy, but also a trend for many brands to control prices and to provide price uniformity. So, if a TVset will have the same price on AMZN and WMT/Best Buy, where do you think I would buy it?
Third, that actually comes along with second, is establishment of "private" brands and products which are sold only at specified retailers. No comments here.
Fourth, is almost perfect easiness, with which I can compare prices online, and choose the cheapest, go directly there, and buy. That's lwhy the conversion rate of some online retailers will always be higher than AMZN's.
So, given these trends, it is quite hard, if not impossible, for AMZN to increase conversion in the ways beyond old and quite knows by far - to cut prices even more! Does it have room for this? I strongly doubt it has any room "organically" as the margins are already non-existent. Of cause, it can always sell below cost, but this strategy has limits (cash on BS), and there is no chance AMZN will win this fight with WMT.
This is my thought on it. I may be missing some important part, or do not know of some innovative market strategy. If anybody knows how AMZN can increase conversion, please, share this knowledge with me.
Amazon: Boom Or Bust? [View article]
As I understand, you assign the scenario V, regarding which you say "the odds are low...", the probability of 0.5 in your spreadsheet.
0.5 is the highest probability assigned to any scenario, so it is certainly not "low". What do you really think about scenario V?
A Valuation Model For Those On A Tight Schedule [View article]
A Valuation Model For Those On A Tight Schedule [View article]
Why did you omit EBAY?
To be precise, AMZN is a mix of multiples of PCCC/BN/BBY/WMT, EBAY, and something like CRM, based on % of revenue contribution by each business line.
A Valuation Model For Those On A Tight Schedule [View article]
Why did you omit EBAY?
To be more precise, AMZN should be a mix of PCCC (BN, BBY, WMT), EBAY, and something like CRM, based on revenue % of each main business line (net margin % contribution is meaningless, as we have no clue how to calculate it).
Following Mr. Market Into Amazon: Suicidal Or Sensible? [View article]
From your numerous pieces on AMZN i assume you are still rather bullish on the story.
Do you have any timeline/metrics/valua... development in mind regarding AMZN, which might change your vision at some point in the future, and move you to Paulo's camp? For example, in 5 years still seeing it trading at 300x with sales growth slowing to zero?
The Truth About Amazon's Margins [View article]
For clarity and brevity, let's omit everything not related to margins, like share price targets and Bezos qualities.
First of all, you did not quite address margin issues in the previous piece, nor in this one. You mention increased investments as the reason for margin decline, not providing sufficient evidence, and not using right comps. Mentioning B&N as comp is not correct. It might have been the case 6 or 7 years ago, but now AMZN business is way beyond that of B&N. Two closest comps as of now (not including cloud) would be EBAY and WMT.
To understand "heavy investments effect" on margins we need to look at the growth phase of WMT. It is quite evident it invested a lot in the infrastructure and people during those times. Yet, it was able to maintain healthy margins. Please, provide your arguments against it if you disagree.
Secondly, EBAY case clearly shows how to maintain healthy margins and growth in online commerce.
What we all clearly see and agree upon right now, is that AMZN margins deteriorated recently. Whether it is because of "heavy (mal)investments" or wrong stuff sold at wrong price, we do not know, as AMZN discloses little. (a good point here is the better a company performs, the more it discloses). The key question is whether it will be able to restore normal margin while maintaining high growth rate. I do not see the answer to it as of now. If you do, and care to discuss, please provide factual material info proving your point of view.
The Truth About Amazon's Margins [View article]
You published a detailed info on historic margins for WMT and for AMZN, and now you are stating that there is no reason to debate margin issue any further. Why then did you publish the data? Why did you call your piece "Truth about margins..."? If you believe the issue is resolved, why to return to it?
And if it is not resolved, why are you refusing to discuss it? I did not question your conclusions, all I mentioned is that addition of sales growth would give better understanding of WMT growth dynamic versus AMZN's. If you disagree, please explain why.
Earnings Are Not Amazon.com's Only Problem [View article]
The Truth About Amazon's Margins [View article]