Company Overview
Amazon is the largest e-commerce company and cloud infrastructure provider in the world. Amazon is predominantly still an online retailer but has also opened physical stores and expanded into many other business lines including grocery delivery, consumer electronics, streaming services, etc.
Key Products
- Amazon.com – main e-commerce platform
- Cloud infrastructure services – Amazon Web Services (AWS)
- Amazon Prime – subscription service including same-day delivery, Amazon Video, Prime Music, Prime Photos, and Amazon Drive
- Consumer electronics – Kindle, Fire TV, Echo
- Grocery delivery – Amazon Fresh (formed through acquisition of Whole Foods in 2017)
- Retail stores – Amazon Go
- Many others…
Investment Thesis
- Global secular trend towards online services – more people shopping and spending online, companies moving to the cloud
- Scale and track record of execution in many different tech and internet-related businesses
- Mature, profitable, and growing company
Potential Catalysts
- Dividend? – Cash flow and cash pile is growing, investors might demand a dividend if cash is not being reinvested or used for acquisitions
- Stock split? – Share price is very high, a stock split will make shares more accessible to investors who don’t have the option of buying fractional shares
Risks / Concerns
- Founder Jeff Bezos recently stepping down in July 2021, succeeded by AWS head Andy Jassy
Competitors
- E-commerce: Alibaba, JD.com, social commerce (e.g. Facebook)
- Cloud infrastructure services: Microsoft Azure, Google Cloud
Valuation (as at 13 Oct 2021)
- Trading at reasonable valuation
- P/S 3.7x on Revenue $443B at Market Cap 1.64T
- P/E 57x on EPS $57.4 at Share Price $3,247
- YOY rev growth of 27%
- Average analyst price target on Tipranks.com: $4,196.90 (29.2% upside)
Disclosure: I’m long AMZN