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Tyler Okland profile picture
Steven this is a thoughtful, engaging, and masterfully crafted article we can all aspire to. This piece really clarified the bull thesis behind Amazon, and offered great insight into the continued AMZN dominance.

Also, 25% yoy e-commerce growth following COVID is tremendous. Plain and simple.
Steven Fiorillo profile picture
@Tyler Okland Thanks Tyler, appreciate it. AMZN is a beast and is being penalized for doing phenomenal. It's an outrage in my opinion.

Now we need to get ready for tomorrow!!!!!!!!!!!!!!! PLTR pre and SOFI Post, I can't wait!!!!!!
Great article, thank you very much! Do you think that a small correction in August, September would bring Amazon stock down to $3000, 3100? That seemed to happen over the last few months. I have a small position in Amazon. Thanks again.
Also, looking at most stocks that drop 10-15% on "missing earnings estimates" most are higher that before the drop after 8 weeks.
Search compare click to buy and have it at the door next day is just lot efficient as running around shopping tasks take time
Your article is correct in many ways. Amazon is and will be a powerhouse. But, given that the stocks P/E ratio of 62 (even with the lower price) is more than double the current market average, and 4X the historical norm the fact that the stock got pummeled after not meeting a (ridiculous) consensus is probably to be expected. (The same thing happened to Micron with its ever increasing consensus figure. And it's P/E is about 13, below the historical average.)
And, BTW, I am finding that Amazon's prices are not always that good. About 40% of the time if I spend some time shopping around on the internet I find better pricing elsewhere.
But, I often find people are lazy when it comes to shopping around, even when it comes to just clicking for an extra 5 minutes. If that behavior were to change Amazon (and its stock price) might not be as well off as it is.
Gary J is Rich on AMZN profile picture

"given that the stocks P/E ratio of 62 (even with the lower price) is more than double the current market average,"

I should cut and paste this - AMZN trades on growth prospects, for 24 years and counting, not PE.
@steve1189 People are not lazy or stupid not to get a bargain somewhere else. People have already realized the benefits of one or two days delivery, one-click-buy and hassle free return options with Amazon. Therefore, they don't look anywhere else . This behavior shouldn't change anytime soon.
davenchop profile picture
Mr. Market showed Amazon zero love after Q2 2021 earnings as shares slid 7.57% the next day. The Analyst revenue consensus projection was ridiculous and an in-depth look is needed.

tell us that before not after....
Gary J is Rich on AMZN profile picture
@davenchop you didn't know?
Dr. Fauci: ‘Things are going to get worse’

Buy AMZN for the 4th wave. 5th wave in Spring. China Lab leak is mutating across the world. Masks and vaccinations and delivered packages working from home are the new normal. Biden has fought the virus and lost.
@Phil Dumfee trump started the virus! Biden will end it!
Dark Samus profile picture
@Phil Dumfee Biden had over 200,000 deaths on his hands
This comment has nothing to do with AMZN as an investment. It has only to do with the premise of the article. The author comments about the insane analyst expectations. Ok, fine. That might have been a correct statement. No idea. But guess what, it doesn’t matter. Stocks are valued based on those expectations. Yes, buy side often doesn’t their own analysis but even the buy side uses sell side research. So if a stock is priced based on those expectations, whether they are too high or not, if missed then the stock reprices to a new outlook. The premise of the article is terribly flawed. It’s like when some days, they missed expectations but gosh, look how much money they’re making. That’s nuts the stock went down. Well, not it’s not. It doesn’t matter how much the company is making. I lot matter if it made less than what was expected as that’s what it was priced for. Now a stock can miss and still go up if forecast is strong for example nor margins bear etc. but in this case they missed in current and forecast. So get over it. I actually like the chart here and AMZN is reasonably priced. Probably undervalued. But the author need no focus on absolutes rather needs to in fact focus on expectations since That’s what stocks are prices on.
Gary J is Rich on AMZN profile picture
@Breadth and Sentiment

Great article for those that have learned that analysts move stocks whether you like it or not.

Learn how to take advantage of analysts and activist moves. I got in and out of Apple with Icahn and made a bundle.

Blue Chip Investing profile picture
Perhaps you don’t have a professional background in equity research, but if you are trying to understand why Amazon sold off after earnings, it’s really quite simple, revenue growth slowed down. When do growth stocks sell off? When growth decelerates and when do growth stocks increase in value when growth accelerates above consensus. Trying to explain this sell off by point fingers at the analyst community is childish, naive and ignorant. If Amazon is to recover over the second half, growth will need to accelerate into the final months of the year or lay the foundation for stronger growth in 2022. Understand this is a richly valued stock and it needs to continue posting breathtaking results to justify its current valuation. Especially considering it’s rainmaker, JB is falling to the wayside.
@Blue Chip Investing you make good points but the OP also has a point that analysts overshot the estimates. It’s current valuation also takes into account its overall dominance as well. I think their AWS and ad business growth should have been applauded more and their investments they are making today will only support higher gross margins in the future (proven true by Amazon’s track record).
Gary J is Rich on AMZN profile picture
@Blue Chip Investing Agree great job by author.
Great article and the reasons i have been buying on any pull back
wallstreet368841 profile picture
AWS is worth conservatively between 12 and 15 times revenue! AWS spin-off value but1.6 trillion in 2024. 109 billion dollars in revenue times 15. The stock is extraordinarily cheap.
The valuations are still astronomical.
@AverageInvestorAtBest and still cheaper than ALL you might consider peers. Amazon is trading at 30 times AWS revenues... most companies in peer with AWS are trading around that... is Amazon's e-commerce worth nothing????
Market is always right when the stock you own is going up . And according to this guy it wrong when the stock he owns is going down
@jackc77 The P/E ratio was infinity but these analysts are crazy, it's only supposed to go up!!!
albertciampi profile picture
I bought more after the drop. I know I won’t regret it.
@albertciampi if it splits you could bus ton more!
@cwsdist.pf if it splits you could buy a ton more!
Bezos could care less what his stock does on a quarterly basis. He only cares about increasing the value of his company long term. Bezos himself has said the earnings are not to be relied upon for they can be manipulated. Bezos only measures how well his company is doing by how much he increases his cash flow. In 2020 cash flow was 92.61 per share. By 2025 the cash flow is projected to be around 200 a share. I agree with this author. I have found that sales are also reliable and that the future sales figures look to be impressive. I compare cash flows and sales to every other company and the sustainability of those sales and cash flows. Amazon is in a class by itself. Math doesn't lie. Amazon is the single best company in the US. This author knows his stuff.
Gary J is Rich on AMZN profile picture

Spot on. You are going to confuse some here with your "cash" talk though. 🤷‍♂️
@Doug- how much less would a Bezos care if a Bezos could care less? If you had said couldn't care less I would know exactly what you mean!
@Doug- I fully agree with the sentiment though!
Dick Cod profile picture
Yeah.....the Amazon analysts broke the Iron Rule Of Stock Distrubution.
Always UNDERestimate earnings so stock touts can scream "It's a beat!" and feed their long positions to excited retail investors.

Ever wonder how --- when about 75+% of companies beat estimates --- those lousy never-get-it-right analysts keep their jobs?
@Dick Cod Agree. I’m in the wrong profession. I’d love to make big bucks for being consistently wrong.
Philipsonh profile picture
I buy from AMAZON occasionally, but as little as possible, BECAUSE I find the website a maze, and the simplest purchase takes me forever. I can order the same item on other sites in 1/4 the time as on AMAZON.
Retire in 10 to 15 profile picture
@Philipsonh really? I feel the opposite
albertciampi profile picture
@Philipsonh no way! With buy it now and and swipe features I can order in seconds. Also I ordered a blood pressure monitor for mom on Tuesday evening….. it was delivered by Amazon the next day at 2 pm. Incredible! This is the best company on earth.
Philipsonh profile picture
I said that I dislike the website. If it works for others, happy for you.
I avoid it as best I can.
growth slows, multiple contraction. There you have it. Not a bad quarter at all but it doesn’t deserve a 60+ PE.
gary03mw profile picture

I wouldn't be so sure of this. Revenue growth may slow as the business gets larger and larger. But the effect on earnings is going to be the exact opposite. Operating leverage is just going to add to the bottom line. When Amazon turns the profit spigot on, it's going to absolutely pour out. I'd argue that Amazon is trading with an artificially inflated PE right now.
Gary J is Rich on AMZN profile picture

"it doesn’t deserve a 60+ PE."

I should cut and paste this - AMZN trades on growth prospects, for 24 years and counting, not PE.

There you have it.
@dawgydaddy thank you. I’m amazed that this author can say multiple times how is this growth not good enough. Other companies would love to have this growth. But other companies aren’t selling for 60 times earnings. I think Amazon is still a good long term hold but I can definitely see very low returns over the next year or two as the stocks multiple compresses. I mean a trillion dollar business can’t grow at 20 plus percent forever. If Amazon falls below 3 grand I will probably grab some more. At 2500 I would load up. But I just see it remaining basically flat for a year or two. Again this author seems to just be focusing on the size of the numbers and not the multiples assigned to those numbers.
vote4weber profile picture
Amazon will end this year with about $100 Billion of Cash. (If they complete the 8.5 Bil MGM deal). What to do with all that Cash?!? Buybacks? Acquire a logistics company like Fed Ex (Market Cap 78 Billion) and let it become immediately accretive to the bottom line in a logistics industry they completely understand? Every year this Cash machine is cranking out real, raw dollars. What to do with it all? So, yeah the “missed consensus” by $1.8 Billion. All that means is they’ll end the year with $100 Billion instead of $102 Billion. Still the same rich guy problem of what to do with it all?
Gary J is Rich on AMZN profile picture

"Amazon will end this year with about $100 Billion of Cash"

Have a source for that?
vote4weber profile picture
@Gary J is Rich on AMZN


$84 Billion at the end of last year...I’m projecting a bit, but not much.
vote4weber profile picture
@Gary J is Rich on AMZN They ended 2020 with $84 Billion and they netted 21 Billion in net profit last year. Add 25 Billion profit this year to 84 and you get 109. Subtract the MGM deal. Ballpark 100 Billion. And if they’re a bit short, give them a month or two and then they’re going to be there.
gary03mw profile picture
@Steven Fiorillo

I really struggle to make it through your articles for two reasons:

1. You genuinely seem exasperated or confused when a company reports an incredible quarter and the stock goes down. This is not a confusing concept. Sometimes incredible results are already "priced in." You should analyze the earnings relative to valuation. The way you're thinking would have left you confused holding Microsoft for 15 years while the stock went sideways.

For the record I hold a lot of the companies you've covered, including Amazon. I am positive on the future prospects of both Amazon the company and AMZN the stock. But I'm not confused or bothered by a stock falling after reporting solid results.

2. You're articles have a lot of filler with pointless rhetorical questions or vague statements. Statements like, "AMZN's growth is a force to be reckoned with." Complaining about a particular style of writing is a small issue, but I find the walls of text, with a significant amount of empty calories, hard to consume.
Gary J is Rich on AMZN profile picture

"Sometimes incredible results are already "priced in."

Priced in while lagging the market for a year and half? I think not. Somebody is confused, you got that right.

The numbers were great but they lowered expectations. Simple as that. But lowered to a level they can beat.
gary03mw profile picture
@Gary J is Rich on AMZN

I didn't mean this exclusively towards AMZN. The author has written similar articles on most of big tech recently.

There's also a reason I included the disclaimer, "For the record I hold a lot of the companies you've covered, including Amazon. I am positive on the future prospects of both Amazon the company and AMZN the stock." It was to try to pre-empt a sarcastic, bad faith, comment like the one you just made.

You also act like a company can't be priced for growth for extended periods. Like Microsoft didn't price in growth for over a decade.

Again, a disclaimer. I'm not saying that Amazon is under or over valued. What I am saying is that this particular author repeatedly writes these articles where he seems confused by good results and a corresponding drop in the stock price.
@gary03mw I 100 percent agree very shotty writing. Sounds like an overexcited 16 year old wrote it.
Due to Amazon's companies size, and how much of the internal workings have become known to the public there has become a ground swell of Amazon "hate" among the general public. Look what happened with Microsoft, during the hay days of "Windows Operating System" from Win 95 thru Win XP. Because Windows dominated the OS market, with a majority of computers, both home, and commercial machines. Amazon has become the "go to" online purchase company for all types of purchases, from food, to nuts a bolts. So, this Amazon "hate" is there. This is reflected in those analyst results. They talk in non speech, %, speculations that are unfounded, and of course every aspect of Jeff Baso's life style, and management is under the microscope.
@Surfwooder yea that may be one of the dumbest comments I ever heard haha. Stop it. We’re gonna risk our jobs and look like fools because we hate Amazon? Stop it. Or are you saying investors won’t buy the stock because they hate Amazon. Forget making money I hate Amazon!!!! Please
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