Seeking Alpha

jakoba

jakoba
Send Message
View as an RSS Feed
View jakoba's Comments BY TICKER:
Latest  |  Highest rated
  • Amazon: Healthy Correction Or Set To Plunge Lower? [View article]
    Many of these «competitors» to AMZN is hardly growing revenue anymore. Compare with five years ago, HD´s revenue is flat, BBY is down, WMT is up less than 20%, while AMZN´s revenue is up 4 times. AMZN also has more cash than WMT now, while WMT has $57B in debt (up from $42B five years ago). In a bad scenario with more deflation where WMT´s start to lose money (if revenue growth continues to decline it will happen soon enough), then the interest payment on this debt may destroy the company. Ironically this debt was added up to please shareholders by buying back shares and giving out dividends. AMZN did neither of these things, yet the shareholders were of course rewarded infinitely better the past five years.
    May 5, 2014. 03:33 AM | Likes Like |Link to Comment
  • Report: Alibaba's IPO filing expected on Monday or Tuesday [View news story]
    Maybe, I think every one of these companies (Amazon, Google, Baidu, Alibaba, Facebook etc) are unique and difficult to compare with each other. AMZN shouldn´t really be compared with WMT because it is growing revenue at 23% vs 1.5% for WMT, WMT isn´t an e-commerce company, it doesn´t sell much digital stuff, doesn´t sell web services, it does make hardware etc. AMZN has razor thin profit margin due to its huge expansions. It could have traded lower revenue growth for higher profit margins. The point is really that Alibaba trades at so many times its revenue that we must factor in many years of very high growth. Something can go wrong, there´s a certain risk and that´s why I think valuation is too high.
    May 4, 2014. 02:47 PM | Likes Like |Link to Comment
  • Amazon: Impatient Investors Are Giving You A Golden Opportunity [View article]
    E-commerce is the future and AMZN is by far the biggest player. This industry´s growth is now far outpacing old retail. WMT grew revenue only 1.5% last quarter, AMZN grew revenue 23%. AMZN´s revenue exceeded GOOG by 25% last year. Why shouldn´t this company have a high valuation? Should it be valued lower than Alibaba (that generates only 1/10 the revenue of AMZN)?
    May 4, 2014. 11:22 AM | Likes Like |Link to Comment
  • Report: Alibaba's IPO filing expected on Monday or Tuesday [View news story]
    I think this suggested Alibaba valuation of over $150B is too high because it prices the whole future into the stock, and then there´s very little upside and then what´s the point in buying it.

    $100B seems more reasonable.

    $150B valuation of Alibaba may be similar as the market value of BIDU a year or two ago ($50B) relative to income and revenue, but at the same time BIDU has not moved the past years and net income is no longer growing as a result of higher R&D and SG&A. The same will likely happen with Alibaba.

    And is Aliababa worth more than AMZN, it had only 1/10 of its revenue last year, just as BIDU had only 1/10 of GOOG´s revenue last year. But GOOG´s market value is 7x that of BIDU.
    May 4, 2014. 02:33 AM | Likes Like |Link to Comment
  • Amazon: Impatient Investors Are Giving You A Golden Opportunity [View article]
    Yes, but who exactly are AMZN´s comeptitors. AMZN operate in so many fields now, it is a pretty unique company. I used AWS as an example, and here they are in many ways the dominant player (http://seekingalpha.co...). I would argue they got to this position as a result of the low prices and focus on growth rather than profit. Did any of the companies you think of as AMZN´s competitors grow revenue by 20+% last year? If so, why not? Also, there´s no need to get personal, and lecture me about obvious things. Just stick to my post/points.
    May 2, 2014. 12:14 PM | 1 Like Like |Link to Comment
  • Amazon: Impatient Investors Are Giving You A Golden Opportunity [View article]
    I think investors from the very start have been aware and symphatetic to the idea that AMZN is a growth company and that net income is not the important thing, revenue growth is what matters.

    In the last annual report (2012), the 1997 shareholder letter was actually reprinted, and it mentioned just this fact.

    In other words AMZN has attracted mainly these type of investors, and these type of investors may not want to sell the stock now even if P/E is 300, 500 or 1000, as long as revenue is growing. They do not want AMZN to be like a General Electric, a company that isn´t growing revenue, or expanding the business, but instead use its cash flows to buy back shares, give out dividends and make expensive acquisitions.

    Witness how AMZN cut prices on AWS like 50 times and is not making much profit out of it. However the type of revenue growth - now some 40% y/y - would not have been possible without cutting prices this much. If they had raised prices, net income from this business would have likely been much higher, but at the expense of lower growth. This is really an example of how AMZN operates.

    Perhaps the best way of determining whether AMZN stock is under- or overvalued is to look at the price/sales ratio historically - or past 5 years. It has fluctuated between 1.7 and 2.8, average around 2.2. But overall been fairly stable.

    When AMZN stock was down to a p/s of 1.7, it lead often to a following boom. When it was up to over 2.5 (like early this year) it was followed by a correction. Now it is at 1.8.

    Based on this AMZN is now undervalued, and an upside of 50-100% over the next year is not impossible. The smartphone may lead to some momentum/speculation.

    http://bit.ly/1iKdKEH
    May 2, 2014. 04:58 AM | 1 Like Like |Link to Comment
  • Analysts Discover 'Gravity' In Amazon [View article]
    It is fairly normal for a stock that goes up so much as AMZN to have severe corrections on the way. Over the past decade I think AMZN had 4-5 corrections of more than 30%. The last one was late 2011 (down 30%). Now we experience yet another one. We may already have seen the bottom (it is up 5% since the bottom on Monday). If AMZN´s share price had been growing vastly more than its revenue over the past years, it could have ended very overvalued. But revenue and share price growth has overall followed each other closely the past years, the past decade, and the company´s price/sales is not high. Earnings have fluctuated and will likely continue to do so. Investors seems to tolerate this as long as revenue keeps growing. This is partially because this is a high growth technology company. Such companies usually do not give out dividends or buy back shares. They are risky, volatile, but can offer formidable rewards.

    Remember also that when AMZN grows revenue, it takes market share from others, it becomes bigger, it can increasingly benefit from economies of scale. It isn´t so hard for AMZN to become profitable, it can only raise prices. But then customers may (over time) become dissatisfied, chose competitors and AMZN will fail to grow revenue as much as it is now doing.

    The example of Google running youtube for years at a loss, comes to my mind. This assured it grew faster than would otherwise have been the case, it created a lot of users, a lot of goodwill, a lot of videos. Now they monetise this.

    Nokia being dominant for so many years due to its economies of scale, is another example that comes to my mind.
    Apr 30, 2014. 01:06 PM | Likes Like |Link to Comment
  • Analysts Discover 'Gravity' In Amazon [View article]
    It seems like investors have largely ignored the low net income of AMZN in the past. Consider how EPS dropped from $2.5 in 2010 to $1.4 in 2011 to slightly negative in 2012. During this period AMZN stock went up substantially (although had a 30% correction on the way) and beat the major indexes.
    Apr 30, 2014. 03:03 AM | Likes Like |Link to Comment
  • Analysts Discover 'Gravity' In Amazon [View article]
    AMZN´s revenue growth is declining, but in a longer term perspective, it has been fluctuating, largely dependent on the macroeconomic situation. It is not like for example GOOG that has just seen general decline in revenue growth over the past 10 years, from 120% in 2004 to 19% in 2013. Many of the DOW 30 companies have seen declining revenue growth the past year. KO for example had -3% revenue growth last year, and +32% in 2011. I can mentioned many more such examples.

    AWS´s very high growth rate will help lift revenue for the whole company. Then there´s new products coming, known (like the smartphone) and unknown. I think it is quite possible that revenue growth could pick up to 25-30% in the coming years. maybe even share price growth will follow revenue growth, as happened in the past. If so AMZN would be quite undervalued now. At least the price/sales ratio is not very high at 1.8x. This is the average for the S&P 500.

    AMZN revenue growth by year:

    21.9% 2013
    27.1% 2012
    40.6% 2011
    39.6% 2010
    27.9% 2009
    29.2% 2008
    38.5% 2007
    26.2% 2006
    22.7% 2005
    31.5% 2004
    33.8% 2003
    26.0% 2002
    Apr 29, 2014. 03:44 PM | 1 Like Like |Link to Comment
  • The Latest Developments In The Amazon.com Saga [View article]
    In any case I´m not the only one saying this (Peter Thiel for example said something similar a year ago). Why not address the points I made in my comment instead?
    Apr 29, 2014. 11:11 AM | 1 Like Like |Link to Comment
  • The Latest Developments In The Amazon.com Saga [View article]
    Ok, gross profit.
    Apr 29, 2014. 10:42 AM | 1 Like Like |Link to Comment
  • The Latest Developments In The Amazon.com Saga [View article]
    I don´t think EPS and P/E is all that relevant for a company that reinvests most of its profit into expanding the business. Other companies may have low P/E and then use their cash to make expensive acqusitions or buying back shares. I think AMZN´s approach is more cost effective, and its immense revenue growth the past decade just proves this point. Also I don´t think investors care too much about the P/E ratio. Look at how EPS went from $2.5 in 2010, to $1.4 in 2011 and to negative in 2012. During this period the share price went up substantially.

    Of course revenue is now slowing down and that´s a problem, but it was already expected when the stock was at $400.

    For Q4 AMZN missed revenue massively by $470m. The expectation had been 22.5% revenue growth, and it ended at 20.3%. This was partially due to some exchange rate issues. It was also at the upper end of AMZN´s own guidance. So the share price was at $400 prior to this earnings release on expectations of 22.5% revenue growth (among other things).

    But for Q1 however AMZN´s revenue beat estimates by $300m and was up 22.8% vs expectations of 21%. This is not bad.

    As regards future revenue/growth, I would say that AWS now has gotten so big would probably put a break to too much declines overall in the revenue growth. Also, other products like their new smartphones should help increase revenue somewhat. We should take into account that AMZN is a company that invest many years into the future and they are almost certainly going to surprise us in the coming years. Personally I apply a certain «goodwill» to the company in this respect. I do not price it exclusively based on what we can see and what is tangible, but on the surprise element. We now know that in just months AMZN may release a potentially revolutionary smartphone using 3D technology for example. But what can we expect next year or two years from now?

    With all this said, I still don´t think AMZN is all that great bargain right now. But this I think is more about the US stock market in general. I only have invested a small position in it (AMZN and PRSS).
    Apr 29, 2014. 10:27 AM | 1 Like Like |Link to Comment
  • The Latest Developments In The Amazon.com Saga [View article]
    Enron? When I read comments like this I know I did the right thing buying yesterday. The time to short as stock is when everyone is cheering and it is at an all time high. Not when everyone is almost irrationally bearish and the stock is down 30% from its peak. Sure, earnings/guidance may have been a bit disappointing. Typically then a stock will sell off 1 or 2 days after. That´s it. Just as the stock was up 10% after the earnings release October last year (Seeking Alpha posted a negative article about AMZN written by Paulo Santos just the day before), it was now down 10% and a little more yesterday, related also to general market conditions. However unlike October 24, the stock was now up 4% right before the earnings release.
    Apr 29, 2014. 03:17 AM | Likes Like |Link to Comment
  • Has The Abenomics Effect Run Its Course? [View article]
    The damage really occured mainly between 1985 and 1989 when the Yen doubled in value against the dollar (from around 250 to 125), nominal GDP went from $1.4T to $3.0T. A ton of money went into the stock market (and real estate). So from 1985 to 1990 the Japanese stock market went up around 7-8 times measured in USD, and the value of the Japanese stock market at one point exceeding that of the United States.

    If we instead measure average GDP growth in Japan in USD from 1985 until 2013, it would be on average 4-5% annually. During this period population has been flat.
    Apr 29, 2014. 02:59 AM | 1 Like Like |Link to Comment
  • The Latest Developments In The Amazon.com Saga [View article]
    So how much did AMZN spend on R&D? I´ve understood they got a few hundred million in tax breaks last year for R&D expenses. Did Apple, for example get more tax breaks from its R&D last year?
    Apr 28, 2014. 01:15 PM | Likes Like |Link to Comment
COMMENTS STATS
345 Comments
397 Likes