AMZN has performed relatively poorly. While the EPS is around $3, the cash flow from operations is $85 B or $8.25 per share. AMZN is still investing heavily, 2023 capex is $52.7 and has $85.6 B R&D budget. Can $AMSN optimize its investment and R&D Budget and start reducing share count and at some point pay dividend?
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Amazon is still the leader in cloud computing. Catalog sales has always been low margin.
Do you think they can be convinced to spinoff AWS?
I don’t think it will happen during Andy Jassy’s tenure. Remember he was CEO of AWS, until he moved up to become Amazon CEO. May be someday.
I’d be surprised if it ever happens. It is Amazons crown jewel. Spinning off their retail business is far more likely.
AWS doesn’t require Amazon name, but rest of the organization requires Amazon name. Just saying. There was a period, if AWS was spun it would have fetched a much higher valuation, so you can justify that for unlocking value, but I really don’t see a catalyst. The stock split took care of RSU’s for AWS employees. I don’t see a catalyst.
I was thinking about it during my walk. Amazon ex-AWS is $483 B in revenue. How long Governments going to be happy with few multi-trillion $$$ market cap companies having absolute control? Be it Amazon or Apple or Google they all are monopolies in the sense they act and behave like monopolies. Apple app store is ridiculous $100 B business. What exactly the APP store provides to earn such a huge revenue? Amazon’s market place vs Amazon seller conflict of interest is well documented.
I am a fan Lina Khan. Congress is too much in the pockets of these big corporations. I know Amazon’s ability to control the supply chain is beneficial to customers is well documents, but still…
I think at some point either US or EU is going to do something about this. Spinning off AWS doesn’t address that, so if Amzon is split, we need to think beyond AWS.
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I would own msft. 35% net income margins
amzn is massive, low margin e-commerce and logistics business attached to great AWS cloud business.
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This note is 2 weeks old, I have been watching and missed the break out, well not entirely I sold a call spread last week and naked puts this week, so I made some money but the break out today is spectacular and I didn’t participate on the upside.
In the short-term the stock could easily get to $220 to $230 and in the long-term there is potential for $290. The long-term target will push AMZN into $3 T Valuation. So, if you are a long-term holder, you keep holding. 
Someone mentioned this in twitter…
I checked the current estimates for AMZN is… remember AMZN has 10 B shares and this is per share estimate
MSFT has 7.5 B shares and this is per share estimate
Separately, Amazon is used to make big bets, spend/ invest money on variety of things has changed… under Andy Jassy they company is slowly tightening the belt… they are driving efficiency/ productivity and looking at ROI very hard on every $. So there is a decent chance the cash flow could surprise on the upside. Just like AAPL, AMZN may very well be able to do sustained buyback at scale and hefty dividends.
Kingran, you are one of those folks I respect for your balanced approach - you are not “only” growth or “only” value guy…And u r not hesitant to admit when u get it wrong…
From what you can muster from the market data, sentiments, seasonality etc…what do you think will happen to the market in 2 time frames
- Just before the election - Say end of October 2024
- By end of this year/ end of December 2024
I purposefully removed November as I think that will be a roller coaster - if the market crazily drops on the day/days just because of the election result one way or the other, I will be ready this time.
Thanks for your input -
Charlie
And yes: credit where due - not sur if u remember your post from somewhere in 2022- when u said u would be looking at SPOT, and a few others - look at where SPOT is from its lows in 2022! I did not buy as I just fully was disheartened in everything (thanks Cathy Wood and UPST) - But yeah, credit where due!!
Thanks for the kind words. We both know it is dump luck than any skill.
What market will do in short-term is difficult to predict. Having said that, I expect no major sell-off, there may be some sector rotation, like Biotech, Financials. There are folks who predict 2H strength and interestingly I saw a research where the market needs more than 2% GDP growth to rally!!! And we need to see what the forecasts for 2025 are going to be.
I am looking into software names (MDB, SNOW, PAYC) that has recently sold off. CVS is interesting. WBA (walgreens) has imploded after the store closure news and that may be a tailwind for CVS, but all drug stores face secular decline. Some regional banks have mitigated their CRE risks and could be an opportunity. Small CAP, REITs could work out if FED does any rate cuts. In both cases, there is no point in front-running, rather wait for the cuts to happen to buy. Fixed income that yields around 6% are interesting trades, if and when the rate cuts happen they could gain in value. Unlike money market where the rate cuts mean rates going down, owing fixed income with longer maturity means the asset actually increase.
Mostly I post my thoughts, trades here.
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Thanks Kingran. Nice to hear your thoughts on what you are seeing in the 2H 2024. Yea, I spotted the software move, but missed it. 10% IGV move in 2 months - one month down by 10% and the entire thing recovered by 2nd month!! Blink and you miss!