Expert Opinion

[doppelg36]

the stock is ridiculously priced and has huge downside.
Amazon is trading at over 300x 2017 estimated earnings and over 150x 2018 estimated earnings
If I didn’t sell it, I would put in a stop loss at either $1196.25, which is the 50 day moving average and a key support level or $1035.25, which is the 200 day moving average and a key support level.
If you didn’t sell it, I think it has 75%+ downside, certainly below $300 a share, which would still give it a P/E of 40, if its earnings grow as much as is predicted in 2018.

I know that this won’t be popular, but I’m not sure I disagree with anything this adviser said.

Compare     AMZN to GOOGL
        
Revenue     177B    110B
Net Income    3B     12B
Fwd P/E      170      26
PEG          6.8     1.0

I own SHOP, because I see them being profitable when they pull back on their expenses. I would not touch AMZN because I don’t see a clear path to them being profitable enough to support a price of (Holy cow I just looked up their price! ) $1439!

I could see doing it as a short-term momentum trade, but I don’t see how you/he would have the confidence to hold long-term. What’s the case for how AMZN is not overpriced?

[brittlerock]

I truly think you are missing the point about Whole Foods.

A couple of things to think on. Amazon has Amazon Fresh. This already provided grocery and household goods before the WFM acquisition. Thye offered delivery in hours (if desired and paid for). The problem was, despite the moniker, the produce was not very fresh. Now they have a retail outlet that maintain produce inventory which already is the produce provider for Amazon Fresh (where WFM exist). I don’t really know if Amazon Fresh was deployed on a limited basis or not. Maybe, in some areas they only offered household products, or not at all.

Another thing, Amazon has locker sites. This is a means of reducing delivery costs. You could have your order delivered to a local locker and pick it up from there. Problem, not enough lockers. Now, every WFM can be adapted as a locker - and while you’re picking up you Amazon order, why not pick up some groceries, especially with all the price cuts at WFM making them far more competitive with Kroger, Safeway, Albertsons, etc.

What does Amazon really do? As I see it, they create scalable infrastructure that removes friction. After they perfect it for their own business, they sell the use of the infrastructure to any and all who want to use it (with few exceptions). They don’t lose business to competitors, they actually gain a share of their competitors business, a win-win if ever there was one.

Catalog sales (precursor to internet sales) has been around for ages. Problem? Delivery. You had to wait and wait and wait for that Sears catalog item to arrive at your door. And then, if it didn’t live up to your expectations based on the catalog description, a return was such a pain in the a$$ that you probably just didn’t bother unless it was big ticket.

They don’t make a lot of mistakes, and when they do, they do one of two things: 1) They fix the mistake via enhancements and improvements to the product/service. 2) They cut their losses if it appears that the cost of fixing the mistake exceeds the potential returns.

I was long Amazon, but I sold my position. Like Saul, I don’t see them doubling (or more) any time soon. But for a long-term buy and hold position, for a disengaged investor, Amazon is a pretty safe bet.

For a company of their size, they remain incredibly nimble.

[Jimb05]

Doppelg36

In my opinion you can’t look at eps or net income for AMZN. They are reinvesting most of their profits back into the business, thus reducing eps and net income (and not paying taxes). I think a much more important metric (and Amazon thinks so too) is operating cash flow.

I used to think the same way about AMZN. In Feb. of 2016 I noticed that they were trading at a price to cash flow of less than 20, which it hadn’t traded at for about 5 years. I felt the business was much stronger than 5 years before, so I made my initial purchase. The “lack of earnings” scared me away from making it a normal position, I only purchased a half position. What a mistake that was.

Jimbo

[jdc115]

Amazon is about redesigning or redefining retail, there is no reason it can’t apply to groceries. The scenario I painted is the application of the Amazon method to groceries. Just copy/edit/paste!

Denny Schlesinger

I am quite amazed at how great Amazon can be. Living in Singapore, it is not the norm for stores to take returns. Most will allow you to exchange a defective electronic device within 7 days, otherwise, you deal with the maker of the device directly through the warranty policy.

I was getting tired of making individual cups of coffee so did a bit of research on coffee makers and purchased one from Amazon which shipped from the US to Singapore. My researched failed me though as the coffee maker only supported 110/120 volts when it arrived. No problem though, I have a few power converters, one ever rated for 1200 Watt which was higher than the 1100 watt rated coffee maker.

But after a few days of using it, I found the coffee just not brewing at the correct temp, it only came out warm and I immediately regretting having made the purchase. Back to Amazon to see what I could do, sure enough, I have a month to return it so I go through the process thinking that I will just have to eat the cost of shipping it back to the US.

But was quite happy to see after I got the return approved that Amazon also gave me a $20 credit to help cover the return.

I am wondering how long it will take for local retailers to start changing return policies here.

[captainccs]

I am quite amazed at how great Amazon can be. Living in Singapore, it is not the norm for stores to take returns. Most will allow you to exchange a defective electronic device within 7 days, otherwise, you deal with the maker of the device directly through the warranty policy.

I had a big snafu with Amazon yesterday. The vacuum cleaner was missing two of the eight parts and the spare filter (a separate item) was the wrong model. Our return policies are even worse than Singapore’s.

After researching the problem for a couple of hours I sent an email to Amazon and another to the filter supplier. Omitting some details, Amazon shipped a replacement vacuum cleaner this afternoon for delivery tomorrow (to my courier in Miami) and I don’t have to return the first one. The filter people are giving me a full refund and I can keep the old filter as well. The proper filter is out of stock until the end of March when I’ll place an order for it. With service like that how can you not love Amazon?

Being able to buy stuff from Amazon is a great help in my banana republic.

Denny Schlesinger