Amazon: 2020 Valuation Outlook

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About: Amazon.com, Inc. (AMZN), Includes: FB, GOOG
by: Kwan-Chen Ma
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Kwan-Chen Ma
Long/short equity, value, Growth, bonds
Summary

Compared to two major rivals, Facebook (FB) and Google (GOOGL), Amazon(AMZN) is more vulnerable since it already has the highest multiple. Yet, among the three companies, Amazon shares had the lowest 2019 annual return.

For the next two years, Amazon’s best case scenario is that Prime and AWS will continue to stay on the trajectory of high growth mode, while high-margin advertising income will accelerate.

Amazon’s best case share value may fluctuate between $1800 and $3000 for the next two years.

The worst case scenario sees the margin contractions from the higher cost of 1-day free shipping and AWS marketing cost.

The worst case scenario suggests that share price will fluctuate between $1600 and $2100.

By K C Ma and R Daniel Pace

Under significant regulatory and China clouds, shares of Amazon.com (AMZN) closed the year with a mediocre 5.3% return. Yet, Amazon’s record holiday season sales from