# Amazon (AMZN)



## peterk

Amazon has been put on my radar after reading the Maclean's article titled "Move Over Wal-Mart" this week. I've never invested into such a "growth" company before: I currently hold XOM, MFC, BAC, TEF, BBL, CNQ, RY, CAT. so Amazon is out of my realm, and the P/E near 100 I think is insane! It interests me thought because now that I think back through the year I've made several purchases through amazon, and not out of some sort of desire to buy online or anything. One item particularly, a high end kitchen knife, I looked in several stores, several website, and came to the conclusion that Amazon.ca gave me the best price with no hassle and no shipping cost. Last Christmas my 59 year old mother who often struggles with computer icons somehow managed to order herself a movie from amazon.ca. 

What are people's thought on the movement of retail from phyisical stores to online?
To me it feels like the whole system is heavily dependent on shipping and shiping costs. I wonder if growth, in developing countries critically, would be hampered by a lack of shipping infrastructure? It would seem that Amazon would be smart to begin aquiring it's own shipping company. The issue of tax avoidance seems to be getting fought in the USA right now, with amazon seemingly winning despite states like california introducing bills to try and force taxation on companies like Amazon. Is this a battle that perhaps amazon will eventually lose, lowering their competitive edge as the consumer must pay more? Then again Amazon seems competetive in canada even with fair taxation.


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## PMREdmonton

The big question is whether they can grow earnings to justify their present valuation. I am skeptical of this possiblity. They have been increasing revenue but have been losing margin in the process.

The other thing is they have had a competitive advantage by avoiding state taxes. More and more states are rebelling against this because of their tight finances. If more of them jump in, it will be tough for them to undercut other sellers.

I think they are too speculative for me.


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## Abha

I had bought Amazon at $170 after an earnings miss and sold it around $220 this year. Regretted the move until the market totally collapsed.

I too am looking to get back in this one. 

The PE is astronomically high but I think you could start to phase into this company taking partial positions.


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## newbie

*amazon*

beats the street but is down after hours......
eps more than double the estimates.
hmmmmm....


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## newbie

peterk said:


> Amazon has been put on my radar after reading the Maclean's article titled "Move Over Wal-Mart" this week. I've never invested into such a "growth" company before: I currently hold XOM, MFC, BAC, TEF, BBL, CNQ, RY, CAT. so Amazon is out of my realm, and the P/E near 100 I think is insane! It interests me thought because now that I think back through the year I've made several purchases through amazon, and not out of some sort of desire to buy online or anything. One item particularly, a high end kitchen knife, I looked in several stores, several website, and came to the conclusion that Amazon.ca gave me the best price with no hassle and no shipping cost. Last Christmas my 59 year old mother who often struggles with computer icons somehow managed to order herself a movie from amazon.ca.
> 
> What are people's thought on the movement of retail from phyisical stores to online?
> To me it feels like the whole system is heavily dependent on shipping and shiping costs. I wonder if growth, in developing countries critically, would be hampered by a lack of shipping infrastructure? It would seem that Amazon would be smart to begin aquiring it's own shipping company. The issue of tax avoidance seems to be getting fought in the USA right now, with amazon seemingly winning despite states like california introducing bills to try and force taxation on companies like Amazon. Is this a battle that perhaps amazon will eventually lose, lowering their competitive edge as the consumer must pay more? Then again Amazon seems competetive in canada even with fair taxation.


wow
now we have thread robery on the site

i will make it easy on u bud 
i will delete my original thread so u can delight urself in the tropical stock
mods please delete my original thread so Peterk can rejoice.... thks


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## CanadianCapitalist

Actually, it was I who merged your thread with an older one because both threads are discussing AMZN. So, no thread robbery going on


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## newbie

CanadianCapitalist said:


> Actually, it was I who merged your thread with an older one because both threads are discussing AMZN. So, no thread robbery going on


i am sure it was you or another Mod.
we do not have authority to move threads.
please delete my old one.
no need for it to exist.
just started thread because it hit the wires.
thks


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## buhhy

I really don't see how Amazon's valuation is justified. Their entire business plan revolves around low margins and undercutting their competition. Look at the kindle fire, it's sold at close to a loss so they can push their services. Also, their US tax evasion keeps their prices low. Once the states start realizing Amazon is a goldmine for tax revenue, and change the tax laws to remedy the loophole, Amazon's prices will have to rise. I really doubt their margins will improve; they'll probably get worse as marketing costs rise.

Also, Amazon pricing definitely isn't competitive in Canada. Their prices are usually much higher than eBay, and definitely higher than their US counterparts. Shipping costs is brutal as well, and their selection is paltry.

Somehow, some investors have this notion that Amazon's (/internet/cloud) growth is unlimited, and that it can grow its profits to fill in the PE gap. At least Walmart paid a dividend.


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## atrp2biz

Newbie...WTF? I'm not sure how to read those posts. Anyways...

Best Buy and Futureshop are my showrooms for AMZN. I study and play with the stuff in store and buy online. I think AMZN has changed the game.


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## GOB

newbie said:


> beats the street but is down after hours......
> eps more than double the estimates.
> hmmmmm....


Maybe because they're guiding for a possible loss next quarter? 100+ P/E for declining margins and soon a business losing moeny? No thank you.

Also there's this nagging issue, and if these kind of things start going against Amazon, then say goodbye to having the lowest prices which is the main (only?) reason most people shop with Amazon to begin with. 




> The state of Arizona is seeking to collect about $53 million from Amazon.com Inc. (AMZN) in unpaid transaction taxes similar to a sales tax, the e-commerce giant disclosed in a filing with the U.S. Securities and Exchange Commission.
> 
> Arizona issued the bill, which includes tax and interest, in November for uncollected taxes between March 2006 and December 2010, the regulatory filing said.
> 
> "The State of Arizona is alleging that we should have collected a transaction tax that is similar to a sales tax on applicable transactions during those years," the company said in its filing. "We believe that the assessment is without merit and intend to vigorously defend ourselves in this matter," the company said in a filing with the SEC Wednesday.
> 
> Amazon has feverishly fought efforts to compel it to collect sales taxes. A year ago, the company said it would close a Texas distribution center amid a tax dispute with Republican State Comptroller Susan Combs, who said Amazon owed $269 million in uncollected sales tax due to the facility's physical presence in the state.
> 
> The company has been on a long, expensive investment campaign to improve its distribution network and digital offerings, but investors have grown increasingly exasperated by how long Amazon opts to sacrifice near-term profit for the goals.
> 
> On Tuesday, Amazon reported its fourth-quarter earnings fell 57%, and warned it could post an operating loss in the current quarter.
> 
> Shares slid by 51 cents to $178.94 in recent trading. The stock is done 17% in the past three months.


http://online.wsj.com/article/BT-CO-20120202-715842.html


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## PMREdmonton

The stock is a long-term play on the future of retailing and cloud entertainment. They are betting that their model is better than traditional bricks and mortar establishments. I think this is true for some things but not all things. This is a very low margin business that has benefitted from the lack of state taxes applied to online businesses.

I do think the company is good and will continue to grow and be successful.

I am not so sure about the stock. It is a market darling so long as it continues to innovate and grow margins which it has been doing.

As for the stock I would say this is a trading stock due to high valuations which it will have to grow into and I think it eventually will but it will go sideways for about 10 years just like former tech darlings like MSFT and INTC as well as companies like KO, PEP and WMT from their 2000 highs.

If you do not want to be a trader then this is not a stock for you. It is priced for perfect execution and will get slaughtered everytime it disappoints. However, the company is very strong and will be a major player in retailing until a better business model comes along.

The one thing I might suggest is actually buying its competition - in particular Walmart, Costco, Best Buy, Target and Staples which are all successful B&M retailers with good profitability - they have been beat up because of the expectation of a switch to etailing over time. Even if this happens I expect most of these companies to adapt and be profitable (with the possible exception of Best Buy).


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## GOB

PMREdmonton said:


> I am not so sure about the stock. It is a market darling so long as it continues to innovate and *grow margins which it has been doing.*


That is incorrect. Their margins that were tiny to begin with have been shrinking steadily to the point that they're guiding for a possible loss this quarter. That will turn their P/E into a non-calculatable number. That's how dire the situation is, before even thinking about tax complications they are beginning to face. 

There are so many better options in this market than investing in AMZN at this price. Even if it does turn around in a few years do people expect the P/E to remain at these levels? Where is the growth in the stock going to come from? 

It blows my mind that a company like AAPL is priced for zero growth despite growing astromically for years, while AMZN is priced for astronomical growth but is making less and less money as time goes on. I won't complain - its easy money with little risk for people who can see what's staring them in the face.


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## PMREdmonton

GOB said:


> That is incorrect. Their margins that were tiny to begin with have been shrinking steadily to the point that they're guiding for a possible loss this quarter. That will turn their P/E into a non-calculatable number. That's how dire the situation is, before even thinking about tax complications they are beginning to face.
> 
> There are so many better options in this market than investing in AMZN at this price. Even if it does turn around in a few years do people expect the P/E to remain at these levels? Where is the growth in the stock going to come from?
> 
> It blows my mind that a company like AAPL is priced for zero growth despite growing astromically for years, while AMZN is priced for astronomical growth but is making less and less money as time goes on. I won't complain - its easy money with little risk for people who can see what's staring them in the face.


Yes you are correct. I meant growing revenues and not growing margins.

The issue with Apple valuation is that it is in a field where a company rises and then eventually falls back to Earth. It has major competition from the likes of Google, Samsung, RIM and Nokia. While it is winning right now it is far from guaranteed that it will continue to dominate a business in which hardware tends to become commoditized quickly. I mean how quickly did it take for DVD player prices to come down to $50. Time will tell if they can continue to run a high margin business over many years in the smartphone and tablet areas. This is why they Apple gets assigned such a high multiple - the street doubts they can continue to dominate technology. They doubt this even more now that Jobs has passed away.

As for Amazon this is clearly not a stock for buy and holders. You will get nothing from this strategy with this company starting from this valuation and it faces lots of headwinds. You also do not get a dividend. As stockholders continue to see the stock go sideways the multiple at which it trades will plummet.

However, the plus side to Amazon is their business model is the way of the future and no one can compete with them in online sales right now. The street assumes they will eventually grow profit to match the business but I think that is going to take a very long time and the stock will be dead money for a decade.


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## GOB

PMREdmonton said:


> Yes you are correct. I meant growing revenues and not growing margins.
> 
> The issue with Apple valuation is that it is in a field where a company rises and then eventually falls back to Earth. It has major competition from the likes of Google, Samsung, RIM and Nokia. While it is winning right now it is far from guaranteed that it will continue to dominate a business in which hardware tends to become commoditized quickly. I mean how quickly did it take for DVD player prices to come down to $50. Time will tell if they can continue to run a high margin business over many years in the smartphone and tablet areas. This is why they Apple gets assigned such a high multiple - the street doubts they can continue to dominate technology. They doubt this even more now that Jobs has passed away.
> 
> As for Amazon this is clearly not a stock for buy and holders. You will get nothing from this strategy with this company starting from this valuation and it faces lots of headwinds. You also do not get a dividend. As stockholders continue to see the stock go sideways the multiple at which it trades will plummet.
> 
> However, the plus side to Amazon is their business model is the way of the future and no one can compete with them in online sales right now. The street assumes they will eventually grow profit to match the business but I think that is going to take a very long time and the stock will be dead money for a decade.


But Apple is valued for ZERO growth going forward (forward P/E of around 9). Do you honestly believe that's likely? To lump Apple in with all the other players is unfair to the company and their unique business model. Yes, margins on tech products trend downwards, but how do you explain Apple's margins increasing while others decline? Clearly they are doing something different, and only they can do it. Similar to what people say about AMZN, I believe AAPL is very different and a standout in the sector. Another point on hardware commoditization - you should notice that Apple does not tout hardware specs nearly as much as their competitors. Apple wins on the software side, the design side and the innovation side - all potentially high margin factors that are not affected by commoditization. Apple doesn't compete on hardware - they simply produce the best overall package that combines performance, design and usability. They won't race to have the first phone with an 8-core processor - that is just marketing hype and they leave that to the others to scramble for. Nobody has been able to even come close to that in any of their product lines for years. If you understand the way they do things in comparison to their competitors it makes a lot of sense how they have kept such incredible margins and are quite likely to do so going forward. 

Take a look at the Macbook Air - the selling point is that you are getting an extremely durable machine with good performance and battery life all in an extremely tiny and well designed package weighing 2-3 pounds. No other competitor can match this at the appropriate price to the point that Intel is offering money as an incentive for companies to try and replicate this product. Apple puts so much thought and work into every little detail that I find it extremely unlikely that another company is just going to walk in and do things better. This applies to pretty much all of their products.

Amazon is only dominant in sales because they offer consumers the lowest price. But they aren't making any money off it. What exactly is their plan to actually make some money? I don't see consumers being particularly loyal to Amazon - if they are forced to raise prices that are on par or even greater than brick and mortar retailers, why would people buy from them? Their entire competitive advantage would be gone. With commodity prices increasing and the tax situation looming, what can Amazon do besides raise prices?

Here's the past six years of data on Apple's average selling prices for their major product lines, keeping in mind Apple's costs for producing them likely decrease over time (www.asymco.com):


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## buhhy

PMREdmonton said:


> Yes you are correct. I meant growing revenues and not growing margins.
> 
> The issue with Apple valuation is that it is in a field where a company rises and then eventually falls back to Earth. It has major competition from the likes of Google, Samsung, RIM and Nokia. While it is winning right now it is far from guaranteed that it will continue to dominate a business in which hardware tends to become commoditized quickly. I mean how quickly did it take for DVD player prices to come down to $50. Time will tell if they can continue to run a high margin business over many years in the smartphone and tablet areas. This is why they Apple gets assigned such a high multiple - the street doubts they can continue to dominate technology. They doubt this even more now that Jobs has passed away.


Apple has done what relatively few companies have done. They have built brand loyalty. Put that together with a tight ecosystem and you have an almost-impenetrable fortress. Sure you might say Android has slightly larger market share than iOS. But keep in mind that iOS not only makes Apple more money, but iOS developers also make more: 4-6 times approximately. Not to mention if you compare only the top-end Androids like SGS2, Galaxy Nexus, Nexus S, the iPhone comes out way ahead in marketshare. Really, Android's market-share is greatly overblown by the sheer number of cheap low-end devices.

Apple is the biggest brand in consumer electronics, with a huge ecosystem and unrivaled brand recognition. Every product they've released have been huge hits. Even the iPhone 4s, which was panned for being an incremental release, is the best-selling phone ever. Even if Tim Cook really flops everything from now one, it would probably take another 2 iPhone and/or iPad releases before they really go downhill.

The level of unrealistic pessimism surrounding Apple is almost as bad as the pessimism surrounding Microsoft. It's ridiculous really. Microsoft consistently increases its profits, and pays a dividend to boot, and the stock goes sideways for 10 years.

Meanwhile, you have shitty buzzwordcloudcomputingsocialnetwork stocks like CRM, AMZN, LNKD, P getting ridiculous valuations.

Anyways, enough with the rant. While Amazon is going to be around for a long time, I sincerely doubt they are ever going to improve their margins.


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## PMREdmonton

buhhy said:


> Apple has done what relatively few companies have done. They have built brand loyalty. Put that together with a tight ecosystem and you have an almost-impenetrable fortress. Sure you might say Android has slightly larger market share than iOS. But keep in mind that iOS not only makes Apple more money, but iOS developers also make more: 4-6 times approximately. Not to mention if you compare only the top-end Androids like SGS2, Galaxy Nexus, Nexus S, the iPhone comes out way ahead in marketshare. Really, Android's market-share is greatly overblown by the sheer number of cheap low-end devices.
> 
> Apple is the biggest brand in consumer electronics, with a huge ecosystem and unrivaled brand recognition. Every product they've released have been huge hits. Even the iPhone 4s, which was panned for being an incremental release, is the best-selling phone ever. Even if Tim Cook really flops everything from now one, it would probably take another 2 iPhone and/or iPad releases before they really go downhill.
> 
> The level of unrealistic pessimism surrounding Apple is almost as bad as the pessimism surrounding Microsoft. It's ridiculous really. Microsoft consistently increases its profits, and pays a dividend to boot, and the stock goes sideways for 10 years.
> 
> Meanwhile, you have shitty buzzwordcloudcomputingsocialnetwork stocks like CRM, AMZN, LNKD, P getting ridiculous valuations.
> 
> Anyways, enough with the rant. While Amazon is going to be around for a long time, I sincerely doubt they are ever going to improve their margins.


I think Amazon will slowly start to improve margins. They are working on becoming the dominant online retailer right now so they are squeezing all the competition out. Once this is done and there is minimal competition for them they will probably start to raise margins. Online retailing is going to be a major growth business for a long time so they have taken a very long-term strategy here of first becoming a great company and then focusing on becoming a profit machine.

I do not know if they will succeed.

The reason I think their margins will improve is they will get better and better at distributions. Right now they are continuing to build capacity with massive capital expeditures. Eventually the build out phase will consolidate and they will have massive economies of scale which they can put to advantage to squeeze suppliers and optimize their distribution network. So I think the margins will eventually improve.

I just think the stock has run so far ahead of its fundamentals that it will take a long time to get there.


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## PMREdmonton

buhhy said:


> Apple has done what relatively few companies have done. They have built brand loyalty. Put that together with a tight ecosystem and you have an almost-impenetrable fortress. Sure you might say Android has slightly larger market share than iOS. But keep in mind that iOS not only makes Apple more money, but iOS developers also make more: 4-6 times approximately. Not to mention if you compare only the top-end Androids like SGS2, Galaxy Nexus, Nexus S, the iPhone comes out way ahead in marketshare. Really, Android's market-share is greatly overblown by the sheer number of cheap low-end devices.
> 
> Apple is the biggest brand in consumer electronics, with a huge ecosystem and unrivaled brand recognition. Every product they've released have been huge hits. Even the iPhone 4s, which was panned for being an incremental release, is the best-selling phone ever. Even if Tim Cook really flops everything from now one, it would probably take another 2 iPhone and/or iPad releases before they really go downhill.
> 
> The level of unrealistic pessimism surrounding Apple is almost as bad as the pessimism surrounding Microsoft. It's ridiculous really. Microsoft consistently increases its profits, and pays a dividend to boot, and the stock goes sideways for 10 years.
> 
> Meanwhile, you have shitty buzzwordcloudcomputingsocialnetwork stocks like CRM, AMZN, LNKD, P getting ridiculous valuations.
> 
> Anyways, enough with the rant. While Amazon is going to be around for a long time, I sincerely doubt they are ever going to improve their margins.


Actually, assuming Apple to be a zero growth story is actually some optimism. The history of technology hardware is commoditization and low margins. First mover advantage has proven to be nil in the long run. Apple has to prove they can do what no one else has ever been able to do in technology hardware.

Do not get me wrong - Apple is by far my largest holding. I am just trying to explain the market skepticism for their multiple.

The other thing Apple is being punished for is their cash hoard. If they are not going to use it for acquisitions or R&D they should start distributing it back to the shareholders as a dividend. As a result, the street is assigning zero to the cash hoard.

Apple clearly needs to transition their business from a growth model to a value model now. While they may still continue to grow they need only a fraction of their cash hoard to do this so they should initiate a dividend. This will attract a bunch of buyers that right now avoid any non-dividend paying companies. This should push their multiple up a bit. They can easily afford a 2% cash dividend and they should initiate one this year.


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## buhhy

PMREdmonton said:


> I think Amazon will slowly start to improve margins. They are working on becoming the dominant online retailer right now so they are squeezing all the competition out. Once this is done and there is minimal competition for them they will probably start to raise margins. Online retailing is going to be a major growth business for a long time so they have taken a very long-term strategy here of first becoming a great company and then focusing on becoming a profit machine.
> 
> I do not know if they will succeed.
> 
> The reason I think their margins will improve is they will get better and better at distributions. Right now they are continuing to build capacity with massive capital expeditures. Eventually the build out phase will consolidate and they will have massive economies of scale which they can put to advantage to squeeze suppliers and optimize their distribution network. So I think the margins will eventually improve.
> 
> I just think the stock has run so far ahead of its fundamentals that it will take a long time to get there.


Yeah, their margins might improve with more distribution centers. But I doubt they have significant room to raise their prices. Plus, it is uncertain how the US tax laws regarding etailers will turn out. It's hard to build a business around rock-bottom margins. Just ask the Android folks 

I do agree that the stock has run extremely far ahead of the fundamentals, I just can't say if Amazon will actually catch up to its stock.


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## buhhy

PMREdmonton said:


> Actually, assuming Apple to be a zero growth story is actually some optimism. The history of technology hardware is commoditization and low margins. First mover advantage has proven to be nil in the long run. Apple has to prove they can do what no one else has ever been able to do in technology hardware.
> 
> Do not get me wrong - Apple is by far my largest holding. I am just trying to explain the market skepticism for their multiple.
> 
> The other thing Apple is being punished for is their cash hoard. If they are not going to use it for acquisitions or R&D they should start distributing it back to the shareholders as a dividend. As a result, the street is assigning zero to the cash hoard.
> 
> Apple clearly needs to transition their business from a growth model to a value model now. While they may still continue to grow they need only a fraction of their cash hoard to do this so they should initiate a dividend. This will attract a bunch of buyers that right now avoid any non-dividend paying companies. This should push their multiple up a bit. They can easily afford a 2% cash dividend and they should initiate one this year.


I don't think Apple will be dragged down by the Android crowd. Apple is no longer riding its first-mover advantage, its already moved on to depending on its brand name. They have a reputation for being high-class manufacturers, and luxury products don't race towards lower margins. Does BMW try to undercut their Japanese competitors? Not really, because BMW has the reputation of being high quality. If Apple does lower their prices, especially in the mobile department, they will CRUSH all competition. IMO, the only competition left in the tablet segment is Windows 8, which has yet to prove itself.

I agree about the large Apple cash hoard though. They haven't made any significant acquisitions yet, and a dividend would definitely be nice. Do some funds have dividend requirements for stocks?


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## GOB

buhhy said:


> I agree about the large Apple cash hoard though. They haven't made any significant acquisitions yet, and a dividend would definitely be nice. Do some funds have dividend requirements for stocks?


Yes, there are funds that require that their holding pay dividends, and if Apple did so a new class of investors would be opened up. However, I have learned to trust Apple management with whatever they decide, until they give me reason not to. As long as the stock continues to give me unbelievable gains, what do I care if they put in a 2% dividend or not? Nobody knows what Apple may be planning to do with their cash - it could be something massive that puts everyone else even further behind. One thing is for sure - they won't go spending billions on questionable acquisitions, so in my view their cash hoard has a better chance of being spent wisely than that of other companies. 

All that being said, I do anticipate a small dividend being announced soon, one that will grow every year.


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## PMREdmonton

GOB said:


> Yes, there are funds that require that their holding pay dividends, and if Apple did so a new class of investors would be opened up. However, I have learned to trust Apple management with whatever they decide, until they give me reason not to. As long as the stock continues to give me unbelievable gains, what do I care if they put in a 2% dividend or not? Nobody knows what Apple may be planning to do with their cash - it could be something massive that puts everyone else even further behind. One thing is for sure - they won't go spending billions on questionable acquisitions, so in my view their cash hoard has a better chance of being spent wisely than that of other companies.
> 
> All that being said, I do anticipate a small dividend being announced soon, one that will grow every year.


It would be nice to get a dividend.

I would settle for a massive stock buyback. Some would say that would not benefit the company much because they do not pay a dividend but it would boost EPS more quickly. Since the stock is fundamentally undervalued on an EV-Ebitda multiple and peg basis this would be an efficient use of the cash hoard. Right now they could buy back about 20% of the company with their cash hoard and this would boost EPS by 25%.

I would suggest at least a 10% stock buyback myself or a 2% dividend.

The problem with the dividend is they would have to move money back onshore and take a 35% tax hit.

The USA needs to do something about their tax laws. Business taxes are exorbitant compared to the rest of the world and encourages businesses to hold onto cash instead of distributing it to shareholders. Countries with more favourable business tax regimes tend to reward shareholders more. Just take a look at Australia where the average dividend yield is about 5% versus the S&P500 at 2%.


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## avrex

The AMZN story continues. It is up almost 9% after hours.

Yes, a great company. But it's a little overvalued, don't ya think.


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## andrewf

Yes, Amazon is insane. They've been scaling and scaling and the market has been waiting for profits to flow from it. It hasn't yet. I don't know if it ever will, at least to justify the current valuation.

In the mean time, I enjoy buying all manner of things for cheap.

On the other hand, some of those charts are just meaningless.


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## andrewf

This company is looking crazier and crazier.

AMZN just turns over dollars. It is facing headwinds in terms of loses its sales tax advantage over bricks and mortar in many US states.

Let's say Amazon continues to grow revenues at 30%, while managing to raise margins to 4% (from just about 0%), in line with companies like WalMart. Assume it falls to a 15 P/E (like other retailers). In 3 years Amazon might be worth half what it is now, if it can pull off this amazing feat of growing while actually making money while facing rising cost pressures.

I'm starting to doubt whether online retail is even a viable business. Given how capital intensive it is, the margins don't seem to support it.


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## buhhy

andrewf said:


> This company is looking crazier and crazier.
> 
> AMZN just turns over dollars. It is facing headwinds in terms of loses its sales tax advantage over bricks and mortar in many US states.
> 
> Let's say Amazon continues to grow revenues at 30%, while managing to raise margins to 4% (from just about 0%), in line with companies like WalMart. Assume it falls to a 15 P/E (like other retailers). In 3 years Amazon might be worth half what it is now, if it can pull off this amazing feat of growing while actually making money while facing rising cost pressures.
> 
> I'm starting to doubt whether online retail is even a viable business. Given how capital intensive it is, the margins don't seem to support it.


Online retail is viable, just not as lucrative as AMZN investors make it out to be. AMZN is growing revenues by sacrificing profits, it can certainly subsist with lower revenue but higher margins. Price matching just about every store and offering free shipping lures in customers, but doesn't do any favours for AMZN's margins.


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## doctrine

> I would suggest at least a 10% stock buyback myself or a 2% dividend.


Amazon earned 21 cents last quarter. That would equate to a 0.3% dividend. And a 10% buyback would require $12 billion dollars. They earned under $100 million - it would take them 40 years to earn that much money at this rate. Yes, it's a little overvalued.


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## andrewf

Amazon has essentially zero free cash flow. How are they supposed to fund a dividend or buyback?


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## phrenk

They only thing they are able to fund is the CEO's compensation stock based compensation plan.

Which is why i'm short via puts.


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## rknigh2

Bought a couple 275 Puts before the earnings simply because of the pop right before the release. Turned out to be a nice 24h buy and sell - I sold the puts at 255 (missed a bit of the move further down).

Now that the price has recovered a bit ($260), is anyone else looking to short this again? I'll probably wait until we get closer to the Q2 earnings again, but if it creeps up to 280+ I may get in a little early. I think AMZN is a great company, but with high PE and consistently shrinking margins, it isn't a great investment.


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## avrex

AMZN is down over 8% this morning.

I sold some calls early this month, so I'm pretty happy.


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## fatcat

i have been looking at amazon also
to me, they have the same problem apple has

everyone is getting very good at copying them

and that is applying lots of pressure to their bottom line

amazon is basing their business model basically on being the single store that you buy _everything_ from
and it won't work


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## andrewf

Amazon and Apple are not really that comparable. Apple is very profitable and trading at a low P/E. Amazon has never made money and is trading at an astronomical P/E.

I think Amazon's problem is that they will never be big enough or be able to have big enough margins to justify their current valuation. Amazon can be big with razor margins or not very big and okay margins. They will never have fat margins. It's just the nature of the business. They are the Walmart of ecommerce and trading at more than 10x Walmart's P/E.


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## MilkMan

walmart pe is about 14, amzn has a pe over 610 currently.

I am less concerned about the pe, and more interested in the fundamentals, and managements direction. This 10% drop in amzn doesn't really concern me.


----------



## jargey3000

Jump ahead to Nov/Dec 2015. AMZN closing in on $680 range. Looks like some of the negative comments above were right on!


----------



## peterk

Everyone used to say that brick and mortar retailers were being hurt by "customers" showing up to badger the the sales staff with questions and to physically handle/test the merchandise, then go buy it for cheaper online.

I see a reversal in this trend, and often do it myself. I do my research on Amazon, as their customer reviews database is extensive and excellent. An incomparable method of evaluating the quality of a product that didn't exists until just a few years ago. I find the product I want, then I go and buy it immediately that evening at Walmart, Chapters, Canadian tire, or Staples, for a few dollars more.

The shipping is the biggest thing holding me back from my regularly using Amazon. I never know where the item is going to go to. If I can pick it up from the Canada Post office it's not that bad, but if it comes via UPS/Purolator then I'm screwed, as their hours are so restrictive and the drive is out of my way. I imagine returns are also a major hassle for the customer and I've never even thought about doing it. Returns at Walmart are easy peasy.


----------



## jargey3000

peter...me too....but here's something: the battery in one of my cordless phones died last month. I went shopping for a new one. The cheapest was at walmart $12.99. I decided to check out Amazon. I found a *3-PACK* of batteries for $15!! I decided to try it - I expedited the shipping for an extra $1.50. I placed the order at noon on Monday.(this was also the week with the Remem. Day holiday on that Wed. - which always shags up the mail, deliveries etc.) The scheduled delivery day was Friday. Living in NL, I smiled & said "Yeah, right!" (you have to live here to understand!) The order showed up in my community mailbox on Thursday afternoon! Couldn't believe it! I'm buying AMZN!!! (and ps - the batteries fit & work fine -so far!)


----------



## peterk

I for sure use Amazon, I just bought a wrist brace from them a few weeks ago. I often purchase a big order of blu-rays on boxing days sales as well etc.

The only two reasons that I consider using Amazon for though are price, and availability of unusual items (like a specific brand of wrist brace). On immediate purchasing, and returns, I don't see Amazon ever beating the likes of Walmart.

Related Amazon question: Is there no way to specify HOW an item is shipped? You say you got your batteries in your Canada Post mailbox. Occasionally I get stuff through Canada Post but usually it's Purolator. I thought my small item wrist brace might come through Canada post but nope it was Purolator. Not knowing if it's coming to CP or Purolator is often a deal breaker for me when using Amazon.


----------



## 0xCC

I just made an Amazon order yesterday and they had a "Ship To" feature as part of the checkout process. In my case I could choose to have the package shipped to my local post office.

I didn't use the feature because I am in a General Delivery area (i.e. we have a box at the P.O. for all our mail, no door to door delivery) and I don't think I have had an Amazon package in the last 5-6 years come via any other method than arriving at my local P.O.


----------



## andrewf

jargey3000 said:


> Jump ahead to Nov/Dec 2015. AMZN closing in on $680 range. Looks like some of the negative comments above were right on!


It's up to 1000 P/E, now.

Even if you buy the argument about profitability not being a major factor, you have to consider what a feasible level of profitability looks like. They _may_ eventually have margins like Walmart. Don't kid yourself about Amazon being capital light. They have many billions of dollars tied up in rapidly depreciating distribution facilities. They have comparable sales/sqft to many bricks and mortar retailers. Ie, they are a bricks and mortar retailer.

Amazon is trading at 3.5x revenues, Walmart trades at 0.38x revenues. Walmart actually makes money. Amazon will never have Apple-like margins on its retail business. It can aspire to Walmart-like margins. The greater fool game can continue, but eventually the greatest fool will be left holding a retailer priced 10x ahead of where it can be valued based on its current retail business.


----------



## Charlie

like everyone else, I now wish I'd bought the stock.

But sometimes it's better to miss a good run, than to grasp at a bad one. And I have my share of bad tech stocks that lived up to warnings about being over valued by all rational measures. 

So I won't be buying Amazon now either. But still wishing I had!


----------



## james4beach

andrewf said:


> Amazon and Apple are not really that comparable. Apple is very profitable and trading at a low P/E. Amazon has never made money


I was reading a lot about Amazon this weekend. Check out this graph of AMZN quarterly earnings history... I think you're slightly wrong about this, they _have_ actually made positive net profit, but not very much on average. Still the plot speaks volumes and I don't find this encouraging. And absolutely right: Apple is profitable and has a ridiculously good earnings history that trends upwards. They're like night and day.



andrewf said:


> and is trading at an astronomical P/E.


Forward P/E of 4000, according to this. Four thousand.


----------



## peterk

I thought this was a good short like 2 years ago. Good thing I didn't know how to short! Anybody up for it now? Is there ever any hope for profitability?

Edit: Just realized _I_ started this thread lol. Guess I should have bought back in 2011....


----------



## heyjude

My first Amazon order was a biography of Maria Callas that I couldn't find anywhere else, in 1995. I remember thinking that they were onto something. When Amazon went public in 1997, the stock price was $18. I just wish I had bought in then!


----------



## fatcat

most people love amazon ... they certainly do a great job and have loyal customers (including me)

i think they are trying to create critical mass in product offerings (i.e have everything and get it to you ultra-fast) so that they will just be unavoidable and a must-use ... it might work

but the risk that they run is that other on-line vendors that sell niche products are going to build up online products and services that are as good or better than amazon and that could be a big problem 

exactly like apple, they merely need to be copied and even ripped off to make serious compeititon


----------



## andrewf

Like I said earlier, I don't think you think of Amazon like Apple. Apple is highly profitable, Amazon is not. Apple has a highly proprietary product. Amazon has to compete with other retailers selling the exact same product. Most importantly, Apple is vertically integrated, selling a high margin product (phones). Amazon is in an inherently low margin business (mass merchant). It is laughable that Amazon is worth half as much as Apple. Would you really trade 2 Amazons for an Apple? I'm no fan of Apple, but I would certainly not take that trade. Apple is at least a real business with real profits.


----------



## avrex

peterk said:


> I thought this was a good short like 2 years ago. Anybody up for it now?


It is so tempting.... but it keeps going up and up....


----------



## james4beach

Is this how you guys buy stocks, you like using Amazon so you buy the stock? I love ordering stuff on Amazon too but that doesn't suddenly change the numbers and make it a profitable company.

It is _barely_ profitable (for a long time it wasn't), and it has sky high valuation that's worse than tech bubble stocks were in 1999. I won't short it but there's no way in hell I would buy this.

If you buy something this overvalued, you're playing with fire and are likely to get burned.


----------



## heyjude

These days I am an indexer. But Peter Lynch, who was a very successful investor way back before you were born, James, did have a philosophy of understanding the business model and advantages of the companies you invest in. That's what I was referring to in my previous post about Amazon in the mid 90s. The PE ratio doesn't make sense for someone buying the stock now, IMHO. 

http://www.valuewalk.com/peter-lynch-resource-page/


----------



## james4beach

Gimme a break, did you even read your own link?



> According to Lynch, attractive companies which have been proven to have high growth and profitability prospects and have a P/E ratio below the industry average, and below the company’s historical average


Let's look at those criteria

1) proven to have high growth and profitability prospects - FAIL. There is no profitability demonstrated. See my link and the charts of net profit.
2) P/E below industry average - FAIL. The Amazon P/E is two orders of magnitude above the industry average.
3) P/E below company historical average - FAIL. The Amazon P/E is one of the highest readings ever.

My opinion: you, and other investors, are in denial. This stock is obscenely over-valued and there is no rational justification for it. You just like that the stock price goes up. And it may keep going up... no denying that.


----------



## heyjude

james4beach said:


> Gimme a break, did you even read your own link?
> 
> 
> 
> Let's look at those criteria
> 
> 1) proven to have high growth and profitability prospects - FAIL. There is no profitability demonstrated. See my link and the charts of net profit.
> 2) P/E below industry average - FAIL. The Amazon P/E is two orders of magnitude above the industry average.
> 3) P/E below company historical average - FAIL. The Amazon P/E is one of the highest readings ever.
> 
> My opinion: you, and other investors, are in denial. This stock is obscenely over-valued and there is no rational justification for it. You just like that the stock price goes up. And it may keep going up... no denying that.


FYI, I don't own any Amazon stock.


----------



## 0xCC

james4beach said:


> Let's look at those criteria
> 
> 1) proven to have high growth and profitability prospects - FAIL. There is no profitability demonstrated. See my link and the charts of net profit.
> 2) P/E below industry average - FAIL. The Amazon P/E is two orders of magnitude above the industry average.
> 3) P/E below company historical average - FAIL. The Amazon P/E is one of the highest readings ever.
> 
> My opinion: you, and other investors, are in denial. This stock is obscenely over-valued and there is no rational justification for it. You just like that the stock price goes up. And it may keep going up... no denying that.


I am not an AMZN shareholder mostly because I don't really understand what the end game is and also because of the points above. However, couldn't all those same points be made over almost all of AMZN's history? Have shareholders suffered so far because of those points being true?


----------



## zylon

source: http://www.nasdaq.com/symbol/amzn/ownership-summary


----------



## fatcat

zylon said:


> source: http://www.nasdaq.com/symbol/amzn/ownership-summary


and the point is ?


----------



## zylon

fatcat said:


> and the point is ?


*Figure it out for yourself.*









http://finviz.com/quote.ashx?t=AMZN


----------



## atrp2biz

Insider buys may be able to provide some information on insiders' thoughts on the company.

On the other hand, insider sells are pretty meaningless. Insiders divest for various reasons, particularly if part of their compensation is through restricted stock. If I had all of my net worth in one company, I would look to divest my exposure as well.

Now onto the graph. I'm not a technician, but the bottom trend line is kind of sloppy. I would have it touch the bottom of the candle wick in November and pass through the bottom of the wick at the start of 2017. I think this would show that the trend line hasn't been violated yet.


----------



## kcowan

I think you will find that most of the insider sales are automatic. Their investment advisors are trying to keep the shareholdings in balance. It is bad enough that your employment is there without having your portfolio heavily weighted. There is some timing associated with buying options that are granted. See the automatic sell noted.


----------



## fatcat

jeff bezos is no different from large numbers of company founders like bill gates and so on who regularly sell shares to raise money for other projects or to give away or buy houses i guess

that bezos sells a little less than 2 million shares and that leaves him you know, like 79 million more doesn't say much of anything to me ... the guy lives and breathes amazon but wisely is diversifying his holdings

is it supposed to indicate some actionable inflection point here ?


----------



## kcowan

Well Bezos has a history of regular sales. An indicator would be a sudden change in pattern, either suspending the automatic sales or a sudden purchase. There are ways around that so it is best just one indicator of many.


----------



## fatcat

kcowan said:


> Well Bezos has a history of regular sales. An indicator would be a sudden change in pattern, either suspending the automatic sales or a sudden purchase. There are ways around that so it is best just one indicator of many.


right ... a 15-million share sale would and should get our attention but slightly around 2% not so much

in the case of bezos i'm not sure anything means much since he will likely go down with the ship and probably hold his shares into the darkest oblivion


----------



## nobleea

kcowan said:


> Well Bezos has a history of regular sales. An indicator would be a sudden change in pattern, either suspending the automatic sales or a sudden purchase. There are ways around that so it is best just one indicator of many.


Bezos has indicated he wants to sell something like 1B a year until forever of his amazon stock in order to fund his Blue Origin spacecraft venture.


----------



## nobleea

Has anyone been following their HQ2 search/fanfare? The submission date was yesterday, so it will be interesting to see what comes of it. I'm sure amazon already had a favourite picked before they even launched this. They just wanted to see if their pick would throw in some incentives (without asking, due to competition), or perhaps a new pick would emerge from the search. There's been some huge incentives thrown around from NJ for example, but hard to believe they'd be a real candidate.

While TO is rumoured to be in the running, they'd be insufferable if they won, as if they aren't already.


----------



## doctrine

Canada has zero chance of getting this. TO is wasting their breath. I can't wait for the indignity to emerge when the real city emerges ("*gasp*. Well, Toronto doesn't need this anyway. We're better off without them. Amazon is missing out", etc etc). 

The arrogance of Toronto to submit a bid with zero tax incentives, for a company that explicitly said it needs substantial tax incentives, shows the massive gall they do have. ("they should come because we're just that awesome" is a good summary of the TO bid)

Amazon *will* get substantial subsidizes from whomever wants them. Boston is one of the most likely candidates, but a dark horse city could emerge. $7B from NJ is a pretty good start.


----------



## james4beach

I'm not sure what kind of Amazon office the competition is for, but if we're talking about warehouses for shipping ... there is nothing attractive about those. They are absolute sweatshops, modern day versions of factory slave labour where the workers are pushed to work at a crazy fast pace, along with alarms and scores that punish them if they can't keep up.

That's not the kind of work that should be encouraged. The whole Silicon Valley approach to technology is undesirable, not something we should replicate. There are better ways to do high tech, and Canada should try to innovate those, not copy American processes.


----------



## bgc_fan

james4beach said:


> I'm not sure what kind of Amazon office the competition is for, but if we're talking about warehouses for shipping ... there is nothing attractive about those. They are absolute sweatshops, modern day versions of factory slave labour where the workers are pushed to work at a crazy fast pace, along with alarms and scores that punish them if they can't keep up.
> 
> That's not the kind of work that should be encouraged. The whole Silicon Valley approach to technology is undesirable, not something we should replicate. There are better ways to do high tech, and Canada should try to innovate those, not copy American processes.


They are looking for a 2nd HQ, so not warehouses. More than likely execs and programmers. I doubt warehouses would generate this type of buzz.
https://www.forbes.com/sites/marcia...quarters-in-1-of-these-5-cities/#40dc322a6168

Since a concern is that this new HQ would drive up real estate prices, I doubt very much we're talking about low wage jobs.

I doubt Toronto or any Canadian city would win seeing as the US has a tendency of handing out large monetary incentives for this sort of thing.


----------



## nobleea

bgc_fan said:


> Since a concern is that this new HQ would drive up real estate prices, I doubt very much we're talking about low wage jobs.


Eventually reaching 50,000 jobs, all high tech, paying an average of 100K. Plus something like 5B spend on new buildings, etc. It's huge.
They look for low housing cost, good transit, a large swath of land close to downtown, international airport, 1mil+ population, large universities nearby to pump out tech grads, etc. Plus tax incentives.
Canada would normally not be in the running, but our generous immigration policies, which is very important for the tech industry, pushes us up the rankings.

I think atlanta is a safe bet. Boston area would probably be decent as well.


----------



## fatcat

nobleea said:


> Eventually reaching 50,000 jobs, all high tech, paying an average of 100K. Plus something like 5B spend on new buildings, etc. It's huge.
> They look for low housing cost, good transit, a large swath of land close to downtown, international airport, 1mil+ population, large universities nearby to pump out tech grads, etc. Plus tax incentives.
> Canada would normally not be in the running, but our generous immigration policies, which is very important for the tech industry, pushes us up the rankings.
> 
> I think atlanta is a safe bet. Boston area would probably be decent as well.


i am betting it goes somewhere in the south - carolinas, tennesee, texas, maybe indiana, ohio - somewhere with not bad weather, affordable housing, universities nearby, reasonable commutes ... on the outskirts of a major southern city


----------



## andrewf

james4beach said:


> I'm not sure what kind of Amazon office the competition is for, but if we're talking about warehouses for shipping ... there is nothing attractive about those. They are absolute sweatshops, modern day versions of factory slave labour where the workers are pushed to work at a crazy fast pace, along with alarms and scores that punish them if they can't keep up.
> 
> That's not the kind of work that should be encouraged. The whole Silicon Valley approach to technology is undesirable, not something we should replicate. There are better ways to do high tech, and Canada should try to innovate those, not copy American processes.


Toronto already has 4 amazon fulfillment centres. The competition is to have a co-equal HQ to the Seattle office, so we're talking back office functions, support, devs.

I think the main appeal of Toronto would be escaping the US' absurd immigration laws. Canada will let Bezos bring $150k/year engineers all he wants.


----------



## nobleea

For a US company, hiring 50K high paying jobs in Canada at an average of 100K CAD a piece vs the same in the US at 100K USD each results in a savings of over 1 Bil a year. Not to mention the ability to import all the foreign born engineers you want to fill the need until local schools can pick up the slack, which means less demand and less runaway salaries. One could argue Canadian cities don't need to offer a whole lot of subsidies to be on a level playing field.


----------



## nobleea

"Paddy Power, which mostly takes wagers on sports but ventures into politics and other topics, gives Atlanta 2-to-1 odds against winning the competition. That's way better than Philadelphia at 7-to-1, Boston at 8-to-1 and Toronto at 9-to-1. "


----------



## andrewf

Atlanta or Boston would make sense to me, but I'm not sure they would pick Pittsburgh over TO.


----------



## nobleea

Austin 3-1
Pitt 14-1
San Jose 18-1
DC 16-1
LA 20-1
Van 66-1
Ott 80-1
Halifax 100-1

TO is up to 7-1 now, behind Atlanta and Austin.


----------



## jargey3000

...sure, i hear it's even-money on YYT.............


----------



## bgc_fan

nobleea said:


> They look for low housing cost, good transit, a large swath of land close to downtown, international airport, 1mil+ population, large universities nearby to pump out tech grads, etc. Plus tax incentives.
> Canada would normally not be in the running, but our generous immigration policies, which is very important for the tech industry, pushes us up the rankings.


Didn't really think about the immigration policy being a factor, but that is a good point. Toronto isn't really cheap housing, but Waterloo is relatively near for attracting some hi-tech students and graduates.


----------



## andrewf

I thought it was very telling that Amazon specifically called for North American rather than just American cities. To me, that seemed almost an invitation for Toronto or Montreal to submit a proposal. And that to me means that they would have been on the short-list (the list Amazon would have developed prior to launching this bidding process).


----------



## james4beach

Building a second HQ somewhere else in North America will help Amazon if the big earthquake hits Seattle (current HQ). The earthquake is expected to _completely_ destroy Seattle, but a second HQ will let Amazon stay alive with a North American control center.

The dominant theory at my office is that the main reason for the new HQ is to avoid building more office space in the insanely expensive Seattle area. Amazon's sprawling and rapidly growing office locations cost a fortune with Seattle RE prices. People at work also believe that they will kill two birds with one stone by going somewhere that won't likely be destroyed by an earthquake.

(Funny enough, we're close to Amazon HQ and yet people at work don't seem concerned about earthquakes themselves).


----------



## peterk

*From 2015:*


peterk said:


> I thought this was a good short like 2 years ago. Good thing I didn't know how to short! Anybody up for it now? Is there ever any hope for profitability?
> 
> Edit: Just realized _I_ started this thread lol. Guess I should have bought back in 2011....


*Sigh* This thread, which I started 6 years ago, upsets me.

Seems that they are ingrained enough now in consumer habits that the concern of profitability has waned, as they can just raise prices and people will keep buying as long as Amazon is still cheapest-ish. I have a feeling this house-entry-delivery system will be seen as normal in a few year's time with minimal complaint, and Prime was really a brilliant way to suck people in and spend more.

Should've been buying Amazon stock or calls all these years... Probably won't do it now either. See you at $2,000 folks. :wink:


----------



## Eaglyeye

Understanding the risks involved with having 0 diversification, does anyone see AMZN being as the safest investment as far as stocks go if one was to put all his investment $$ into it ?


----------



## andrewf

Nope. They still make $0 on their retail business, and I don't think AWS (most of the value of AMZN) has much of a moat. So, safest? No. But, as long as AMZN can keep up revenue growth, I suspect the ride in the stock will continue. It's a bit like Uber, I think they are hoping to innovate into profitability, but their current business model (at least in retail) is not going to become substantially profitable just through scale (ie, getting WM margins on trillions of $ in sales would be required to justify valuation).


----------



## MrMatt

andrewf said:


> Nope. They still make $0 on their retail business, and I don't think AWS (most of the value of AMZN) has much of a moat. So, safest? No. But, as long as AMZN can keep up revenue growth, I suspect the ride in the stock will continue. It's a bit like Uber, I think they are hoping to innovate into profitability, but their current business model (at least in retail) is not going to become substantially profitable just through scale (ie, getting WM margins on trillions of $ in sales would be required to justify valuation).


The AWS moat isn't obvious since lots of companies are competing here.
The basic virtual server is interchangable, but if you rely on any advanced services from the provider, switching is hard.

When you get into functions as a service, you're basically building your application dependent on their services. You can't easily port it over to Google, Azure or someone elses cloud.

Just to get an idea of all the services, go to http://aws.amazon.com, and click on "products"


----------



## andrewf

^ But other providers are highly incentivized to make switching easier. And as the market matures, I'm not sure AWS can get away with such high margins.


----------



## gardner

MrMatt said:


> if you rely on any advanced services from the provider, switching is hard.


While this is true, it is mostly caused by the stupidity of the competitors, not by anything clever that Amazon has done. For example, if you use generic relational DB services in AWS, this is MySQL. That technology is free and anyone can use it. But in MS Azure generic relational DB services is MS SQLServer. So if you want to port your AWS app over to Azure, you've got a bunch of work to do. This is not something clever that AWS has done to create a competitive moat -- it is a dumbass boner move by MS to cut off their nose to spite their face.


----------



## MrMatt

gardner said:


> While this is true, it is mostly caused by the stupidity of the competitors, not by anything clever that Amazon has done. For example, if you use generic relational DB services in AWS, this is MySQL. That technology is free and anyone can use it. But in MS Azure generic relational DB services is MS SQLServer. So if you want to port your AWS app over to Azure, you've got a bunch of work to do. This is not something clever that AWS has done to create a competitive moat -- it is a dumbass boner move by MS to cut off their nose to spite their face.


Or look at other services, like Cognito vs Firebase. 
If you use either it really sticks you to that solution.


----------



## KaeJS

I got burned on this last week.

I figured, **** it. All time highs. PE of 300. Company reported $0.52 EPS in both Q4 2016 AND Q4 2017, essentially going nowhere.

They are buying up **** that isn't their business (Whole Foods) and trying to get drug approvals. Sounds like a shadowy and dark reminder of Valeant... Does it not? Acquire, acquire, acquire.... Crash...

Anyway - I wrote a vertical call spread for $1150/1170. Got destroyed.

Yes, I get it. Black Friday. How could I be so stupid, right?

Nah...

Me? Nah..

I'll tell you what's stupid; AMZN at all time highs, huge PE, low profitability, and a 5.5% increase in share price during a shortened 3.5 day trading week.

Am I bitter? You bet.

But seriously... Let's have an intelligent conversation...

Where is this stock going? I mean honestly... With all the AMZN hype and the BTC hype and cryptocurrency and tech in general...

I mean look at NVDA, too...

Two words:

Tulip. Mania.

Who's with me?


----------



## andrewf

NVDA story is more AI/self driving car driven than cryptocurrency. AMD benefits from cryptocurrency much more.


----------



## fatcat

KaeJS said:


> They are buying up **** that isn't their business


i quoted just the part that matters ... the thing is .... everything ... is their business

what they sell is the most valuable commodity on the planet which is ... time ... they make buying everything easier ... they are removing as much friction from the acquisition of goods as they possibly can

i thought i was an apple fan until i started to use amazon

i grant you that whole foods is a risk but they clearly are targeting basic goods and have strategy to integrate virtual with actual

this is a good article on why they are buying whole foods: https://www.forbes.com/sites/adamha...ying-whole-foods-is-a-good-idea/#3e5dd11f6f15

whole foods is a perfect fit for their customer base

i don’t think amazon is hype in any way, i think they are the model for how business will have to be conducted over the coming decades ... if you can’t do it as well as amazon (and apple), you are going to get run over eventually


----------



## KaeJS

So you are saying the $1200 price tag for one share of AMZN is justified?

Because I really don't see it and I'm 27 years old. It's not like I'm out of the tech loop. What am I missing that warrants $1200/share?


----------



## Butters

Be sure to add Weed to that overvalued list. 

Amazon bought twitch.tv a few years ago which was a great purchase, the income from this site is endless with all the e-sports coming up

Thing is all these companies PE are getting out of control. If you want into any good name you have to pay a premium.

Is it because all these new ETF's are lowering management fees and people just have more money to spend?


----------



## james4beach

KaeJS said:


> Where is this stock going? I mean honestly... With all the AMZN hype and the BTC hype and cryptocurrency and tech in general...


Maybe this is the blow-off top, the last stage of the global liquidity mania.

AMZN's 10 year annual return is 31% _per year_
Bitcoin's 4 year annual return is 81% _per year_

Why are people buying these? Not too big a mystery. People buy them because they go up. IMO people invent stories and justifications so that it doesn't look quite that silly.


----------



## fatcat

KaeJS said:


> So you are saying the $1200 price tag for one share of AMZN is justified?
> 
> Because I really don't see it and I'm 27 years old. It's not like I'm out of the tech loop. What am I missing that warrants $1200/share?


i use them and marvel at how good they are compared to everyone else i use and i only own them as a small component of QQQ, i would never buy any tech company outright

amazon spends a lot on r and d and they are pioneering in all kinds of ways

i loved this from fast company:



> In January, the nonprofit Institute for Local Self-Reliance conducted a survey of nearly 3,000 independent businesses, half of them retailers, asking them to cite the biggest threats they faced. *Competition from chains and big-box stores, health care, finding employees, and rising rents all ranked near the bottom* as modest concerns. *“Way above everything was competition from Amazon,”* says ILSR codirector Stacy Mitchell.


they, so far, are an innovating and category destroying machine ... but yeah $1200 seems like a lot but compared to what ? ... there is nothing else like amazon


----------



## peterk

I bought 1 share last week @ $1,127 - Crazy - Let's see what happens.


----------



## lonewolf :)

KaeJS said:


> Where is this stock going? I mean honestly... With all the AMZN hype and the BTC hype and cryptocurrency and tech in general...
> 
> I mean look at NVDA, too...
> 
> Two words:
> 
> Tulip. Mania.
> 
> Who's with me?


It does not matter if the stock tops here increases another 10 fold or even 100 fold the average investor investing in Amazon will lose money. No way is everyone going to get out @ the top


----------



## james4beach

No comments on how the President of the United States manipulated the AMZN stock price by publishing false statements?
https://www.sec.gov/fast-answers/answerstmanipulhtm.html

I've been backing off from US investment ever since the last election. This is a small example that confirms my fear... due to political and maybe even personal business motives, the President is going to do things that effect the market. He lacks professionalism, and I don't trust the US financial system (and stocks) under his watch.


----------



## jargey3000

i think Woolco & Consumers Distributing will make comebacks


----------



## bgc_fan

jargey3000 said:


> i think Woolco & Consumers Distributing will make comebacks


Funny story. In the USA, the book chain Borders killed off the independent book store. Amazon then killed Borders, which led to the resurgence of independent book stores. The moral of the story is that if you can find a niche, or offer something online stores can't offer, you can survive.


----------



## indexxx

jargey3000 said:


> i think Woolco & Consumers Distributing will make comebacks


I kind of miss Consumers Distributing- they had some neat stuff you usually couldn't find elsewhere. Poor business though.


----------



## jargey3000

I bought a lot of LPs for $4.98 at Woolco....
Wasn't it Cons Dist. where you had to look up an item in the catalogue...then fill out a little slip with the item no & info etc. & bring it to the counter to get order filled...??LOL


----------



## kcowan

I remember buying a ghetto blaster for my youngest son (he would wash the cars if he had music) and it was $89 on sale in NY. With the box and packing material it was a huge carry-on. Customs ignored it and went over my suitcase with a micrometer.

The Bay was selling the same item on sale for $299 marked down from $349! Some real deals at Consumers Distributing. But they relied on you investigating the items at regular retailers first. Another case of a retailer missing the revolution.


----------



## peterk

peterk said:


> I bought 1 share last week @ $1,127 - Crazy - Let's see what happens.


Sold my 1 share today at $1,919 - Crazy! - Wish I had bought 100 shares, oops.


----------



## yousufj56

Any thoughts on e.r?

Most likely they beat but they may downgrade outlook? Interest rates have risen plus tarrifs to China.


----------



## james4beach

peterk said:


> Sold my 1 share today at $1,919 - Crazy! - Wish I had bought 100 shares, oops.


Congrats on getting out of a momentum stock at such a high point! You traded this very nicely.

AMZN is trading pre market today at $1600, down 10% going into Friday. This will be interesting. Amazon has been *the* tech bubble momentum stock so everyone will be watching it for direction.

Where AMZN goes, the NASDAQ follows. AMZN is a weighting of 10% of the NASDAQ index / QQQs.


----------



## 30seconds

james4beach said:


> Where AMZN goes, the NASDAQ follows. AMZN is a weighting of 10% of the NASDAQ index / QQQs.


Why are the Dow and Nasdaq even used? Only good for spreading fear/hype.


----------



## jargey3000

why the drop today?


----------



## jargey3000

closed friday @$1642, down -$139
where to from here?
a bounce-back?
buy the dip?


----------



## james4beach

My take on it: AMZN, like most tech stocks, is dramatically overvalued. As long as central bank stimulus and optimistic investor mood (momentum chasing) continues, it goes up strongly. However in the absence of those two primary drivers, it goes down.

Same story for the S&P 500


----------



## SixesAndSevens

james4beach said:


> My take on it: AMZN, like most tech stocks, is dramatically overvalued. As long as central bank stimulus and optimistic investor mood (momentum chasing) continues, it goes up strongly. However in the absence of those two primary drivers, it goes down.
> 
> Same story for the S&P 500


we are fast approaching the time when a small handful of stocks like amazon, apple, microsofty,...will become the de facto US stock market.
other companies will either go bankrupt (sears, toys r us,...), get bought out (whole foods, Monsanto...) or become small, insignificant zombie companies (GE, Alcoa,...).

the s&p 500 will effectively become cap weighted like the DOW...around 10 - 15 very large companies each with a market cap of > $1 trillion, and then a big gaping gap, then around 485 companies with market caps of a couple of billions only.
buy in now or forever be left behind....


----------



## peterk

james4beach said:


> Congrats on getting out of a momentum stock at such a high point! You traded this very nicely.


Ya well - I sold my share and then went and bought 1 share of GOOGL... for $1250. ig:


----------



## MrMatt

james4beach said:


> My take on it: AMZN, like most tech stocks, is dramatically overvalued. As long as central bank stimulus and optimistic investor mood (momentum chasing) continues, it goes up strongly. However in the absence of those two primary drivers, it goes down.
> 
> Same story for the S&P 500


Except Amazon or Alibaba look likey they're going to own the commodity half of their major markets, and I think they're worth lots.


----------



## kcowan

MrMatt said:


> Except Amazon or Alibaba look likey they're going to own the commodity half of their major markets, and I think they're worth lots.


Would you care to put a P/E forecast on that? Lots is very unsatisfying.


----------



## number12spicy

Should I buy on share of Amazon or 20 shares of Microsoft? Hmm


----------



## agent99

I see they have chosen NY City and Northern Virginia for their new HQ 2 locations. Not surprisingly not in Canada! At least Ottawa is getting a warehouse. 
https://www.wsj.com/articles/amazon...rginia-for-additional-headquarters-1542075336


----------



## james4beach

At the risk of looking foolish in another couple of years, I'm going to say that AMZN now looks to me like it might shortable around $1777. For the time being, I'm bearish on AMZN.

I'm saying this based on technical analysis (TA), with the technique used by O'Neil of Investor's Business Daily. You will have to read his publications for a thorough description, but I see the following pattern in AMZN:

1. stock has a ridiculous run up, while the business growth and hype is very strong
2. stock encounters a sharp selloff, then is sideways for a while -- bulls fight bears
3. the stock *fails* to reach new all time highs. It's now been a year without a new high.
4. the stock attempts to rally several times, failing each time
(I think we are here)
5. after a while, investors and speculators lose confidence, and sell everything

One way in which AMZN does not match O'Neil's model is that the selloff in #2 is normally very high volume. With AMZN it was not a particularly high volume selloff in late 2018, which reduces my confidence that it fits the ideal pattern. 

In my view, TA is a way of reading both the business condition of companies and the behaviour of other investors. I don't view it as witchcraft, or claim it's predictive. Based on my knowledge of TA, I would read today's AMZN stock as a less compelling growth case going forward. I also see signs that existing speculators are selling into the strength, and lack confidence that the stock will go higher.

I am not short the stock because I don't have any room in my investment plan for ad hoc speculation (maybe some time when I have more money). However, if I did short this at $1777, I would cover only if it rallied 23% from here = $2186 as the stop, at which time the market cap would be approx $1.1 trillion. I would use a soft or 'mental stop' and not enter a stop order, since it's not wise to communicate your intentions to the market.

If you really did want to bet short, as with anything you need a diversified portfolio of multiple positions because stocks are inherently unpredictable and you can't really just choose one and get it right. But I think AMZN is a good candidate to short.

Finally, I should add that I don't have a great track record speculating on individual stocks, which is why I only use indexes and index-like portfolios myself.


----------



## doctrine

It looks more neutral to slightly positive to me, like it is more converging. There is not a trend of lower lows, even if a new high hasn't been reached, and the 200 day moving average is still moving higher. A very interesting technical point with the stock trying to break through both the 50 day and 200 day. I wouldn't want to be in the stock short term if it dropped below $1700, but it could easily try to test the high for the 3rd time. 

My take is the trade would be long at $1777 with a sell below $1700 but potentially hold to $1950-2000, presenting a good risk/reward with a relatively good clear sell target only 5% below current price. Upside 10-20% vs 5% downside is a trade many would take. I could also be wrong but that's what I see.


----------



## james4beach

That seems like a reasonable interpretation as well, doctrine. The stock is after all spending most of its time above the 200 day moving average, which is bullish.

The main reason I saw a bearish pattern is the failure to make a new all time highs. In super hot momentum stocks, making new highs is exceedingly important. Greedy trend followers and speculators simply do not tolerate a failure to make a new high. Their patience wears thin, and the population of "greedy latecomer bulls" starts transforming into a population of sellers. In my experience, with each passing month, that transformation progresses.

And given the ponzi-like nature of stocks like this, the failure to draw in new greedy bulls is also a factor. Notice how the volume keeps dropping on AMZN. It's pretty much lower every month. I think this shows that new gamblers aren't jumping on board. And you _need_ new gamblers on ponzi stocks.

Charts like this are almost sure to explode in one direction or the other, perhaps on an earnings release or other notable event.


----------



## james4beach

I'm not too serious about the TA here but I did want to point out that AMZN also just had a "death cross" pattern. I'm still leaning bearish on the stock.


----------



## Topo

Looks like AMZN is falling in after-hour trading. Down more than 6%.


----------



## james4beach

Topo said:


> Looks like AMZN is falling in after-hour trading. Down more than 6%.


Yes appears to be down pretty hard AH on disappointing earnings. However, I've found that AH trading can be very different than normal market hours response -- it will be interesting to see what happens tomorrow.

Also, I have no skin in this game, but I love watching things like this. I have trouble speculating on single stock positions, because I would never just go long a single stock in isolation either. It would have to be part of a larger speculative portfolio (many positions) and I just don't have the time to dedicate to such an effort. I already have 3 different (real) strategies in operation simultaneously and they keep me pretty busy and entertained.


----------



## Topo

james4beach said:


> Yes appears to be down pretty hard AH on disappointing earnings. However, I've found that AH trading can be very different than normal market hours response -- it will be interesting to see what happens tomorrow.
> 
> Also, I have no skin in this game, but I love watching things like this. I have trouble speculating on single stock positions, because I would never just go long a single stock in isolation either. It would have to be part of a larger speculative portfolio (many positions) and I just don't have the time to dedicate to such an effort. I already have 3 different (real) strategies in operation simultaneously and they keep me pretty busy and entertained.


True. Sometimes the after-hours market reacts erratically. The main players usually play in open hours.

Still it was very prescient!


----------



## james4beach

One of my friends owns about half a million $ worth of this stock. I kept my mouth shut about the T/A because I didn't want to influence his investment decisions, but if this thing crashes, I'm going to feel a bit guilty.


----------



## Topo

james4beach said:


> One of my friends owns about half a million $ worth of this stock. I kept my mouth shut about the T/A because I didn't want to influence his investment decisions, but if this thing crashes, I'm going to feel a bit guilty.


Well...if it tanks, he will figure out who to blame! 

To me, it looked like a nice stock with an upward unremitting trajectory, until an esteemed member of CMF announced his TA findings!


----------



## james4beach

Interesting, look how much higher the regular hours price is today! This is now almost 5% higher than last night's earnings reaction. The stock market is a funny place, full of magic & mystery.


----------



## MrMatt

If I had half a million I'd divest a bit.

The reality is Amazon as several very valuable aspects.
The three I find most interesting are.

1. AWS.
2. Third party logistic system.
3. Very popular Storefront.

1. AWS, nobody else offers such a broad number of services, and they announce more on a regular basis.
They do have competition, but they're only in niche areas, and they're much smaller. AWS seems to be able to charge a premium.

2 The Amazon delivery system is really cheap to fulfill and deliver orders. They're super cheap. Playing the scale game, maybe Walmart can match them, but I can't think of who else.

3. Lots of people don't bother looking elsewhere, if you have Prime, there is little reason to consider any other mail order shop.
Microsoft paid a lot to buy Minecraft and Linked in users, the eyeballs going to Amazon are very valuable.

If Amazon plays it right, I think those 3 attributes are incredibly valuable (and separable).


----------



## andrewf

I think Amazon must have doubts about how big pure-play online can get, hence why they are seeking a growing bricks-and-mortar footprint through Whole Foods, and now bookstores, general merchandise stores, convenience stores, etc. I think Amazon is somewhat capped in terms of addressable market--Walmart bricks and mortar will still beat AMZN on price in many categories, due to structurally higher ecommerce fulfillment cost. For a large demo, this matters. People who are relatively insensitive to price and like convenience of not going to stores/searching physically are the mainstay of Amazon sales. That is really only the top of the income distribution. Below-median shoppers often see AMZN as something they dabble with but generally more costly. All this to say, I don't see Amazon disrupting Walmart all that much unless they start opening their own discount/grocery stores. Walmart may lose out on some profitability due to AMZN cherry-picking some profitable categories.


----------



## bgc_fan

andrewf said:


> I think Amazon must have doubts about how big pure-play online can get, hence why they are seeking a growing bricks-and-mortar footprint through Whole Foods, and now bookstores, general merchandise stores, convenience stores, etc. I think Amazon is somewhat capped in terms of addressable market--Walmart bricks and mortar will still beat AMZN on price in many categories, due to structurally higher ecommerce fulfillment cost. For a large demo, this matters. People who are relatively insensitive to price and like convenience of not going to stores/searching physically are the mainstay of Amazon sales. That is really only the top of the income distribution. Below-median shoppers often see AMZN as something they dabble with but generally more costly. All this to say, I don't see Amazon disrupting Walmart all that much unless they start opening their own discount/grocery stores. Walmart may lose out on some profitability due to AMZN cherry-picking some profitable categories.


I don't think that they are getting away from the pure-play online. Even with Whole Foods, I don't believe they are selling books (for instance). Maybe I missed the news, but I thought their only bricks presence was Whole Foods and an automated, pricey corner store. It's not like you can go in and browse and find whatever you want in a bricks and mortar store. I could see something like Whole Foods being a distribution center where customers can pick up their orders instead of waiting for the mail, but other than that, they really do serve a different clientele than Walmart.


----------



## andrewf

bgc_fan said:


> I don't think that they are getting away from the pure-play online. Even with Whole Foods, I don't believe they are selling books (for instance). Maybe I missed the news, but I thought their only bricks presence was Whole Foods and an automated, pricey corner store. It's not like you can go in and browse and find whatever you want in a bricks and mortar store. I could see something like Whole Foods being a distribution center where customers can pick up their orders instead of waiting for the mail, but other than that, they really do serve a different clientele than Walmart.


Amazon Books
https://en.wikipedia.org/wiki/Amazon_Books

Amazon Four Star Store
https://www.ft.com/content/b2255bca-f599-11e9-bbe1-4db3476c5ff0

Amazon signs leases for new grocery store chain near LA (not Whole Foods)
https://commercialobserver.com/2019...la-with-plans-to-build-a-grocery-store-chain/


----------



## m3s

amazon just lost the large aws department of defense cloud contract to microsoft. Some say because bezos owns washington post which is critical of trump

In the US I get 5% off all amazon + 15% off subscriptions + automatic coupons with add-ons like honey. I can also see the historical price with add ons and set alerts for major items with sales. In the US it's same day or next day delivery, or you can opt for a weekly delivery and get $1 credit. Plus the refunds are much faster/easier

For me the convenience of not having to waste time and go to a walmart circus is enough alone, but comparing prices I don't even see much if any value unless you want to run around to different physical stores all day hunting short loss leader sales for limited stock and then jump through the various hopes and tricks of traditional stores etc

For brand names that have their own webstore, I find it's cheaper to buy direct from them if you can time their sales


----------



## andrewf

^ Try role-playing a lower income family and wander through a Walmart and price compare to Amazon. Say, drinking glasses. Walmart is vastly cheaper than Amazon. And on it goes. You are exactly the kind of upper middle class convenience-oriented shopper I was referring to.


----------



## m3s

Yes definitely convenience oriented. It's not worth my time/gas to drive to wal-mart to save a few bucks on inferior quality that I can filter out easier online.

I compare the prices of random things and amazon tends to be cheaper for what I buy. amazon usa is also much different than amazon canada. I'm not watching flyers or driving to a store just for a flash loss leader sale or clipping coupons etc With those kind of efforts you could save, but stores use loss leaders to get you in their store for good reason. You've invested that time and gas so you likely buy something else while there

There is a counterfeit issue on amazon though. I think counterfeits are being returned and then resold by amazon


----------



## james4beach

Buying on Amazon is very convenient, and when I'm in the US, also very fast... but I am often disappointed with the quality and reliability.

One problem with Amazon is that, for a given listing, you often don't know exactly what you're getting. The best results are for things "shipped from and sold by Amazon" but for many other items, you can't really be sure what exactly you will get. The model you end up can be different than what's shown.

This means that reviews you're reading might also be referring to a different product than what _you_ will get. For example it might come from a different vendor (Amazon swaps these willy nilly). That also bothers me because these are nameless vendors ... Amazon is just a conduit. So I wonder to myself things like, under what conditions have they been storing these goods?

I once bought a pack of noodles on Amazon, my first attempt at buying food, and it was moldy. Not too surprising I guess. You don't know who the vendors are, or how they run their operations. In another case I bought some dental floss, and what they shipped to me was dated something like 7 years in the past with visible deterioration of the product.

That wouldn't happen with items you buy from Shoppers Drug Mart or Walmart.

Often if you look through Amazon reviews on a product, you will see a mix of people both very satisfied and those complaining about terrible quality products with big problems like I've mentioned. That's because you really can't tell which *source* the items come from and you can't be totally sure what you're going to get. The source/vendor that's described in the listing may have changed over time, so other people who reviewed the product might have received a totally different product and experience in quality.


----------



## andrewf

Buying food from Amazon is apparently a bit dicey. Amazon has gotten recent press coverage having shipped expired food to consumers. It is good advice both online and in-store to check date codes (humans are fallible and don't always properly cull expired product). I'm more amazed that Amazon is not controlling this correctly. In a warehouse environment it should be possible to track date codes and prevent expired (or aged) product from shipping to consumers. I can only assume they are cutting corners on date code checking (could be verified in seconds at packing). I also wonder what this means for recalls. Traditional retailers have robust processes in place to quickly isolate and remove recalled products. I don't have the same confidence that Amazon is doing this, particularly with inventory from third party sellers.


----------



## peterk

Used to be you go to the mall to look at things, try them, waste the salesman's time, and then buy it online.

Now, you go online, read all the reviews from the best online sites (Amazon etc.), and then drive 2 minutes down to the store and buy it right away.


----------



## james4beach

peterk this is exactly what I did with a recent printer purchase. I read everything on Amazon, then went to Staples -- touched and felt the printer -- then bought it.

I've bought computer equipment before on Amazon but I would strongly recommend only doing this if it is shipped from and sold by Amazon, not a third party. Even then, I would hate to have to deal with any kind of return or exchange scenario.

Buy it at a store like Walmart and Staples and I think you have X days to just return it, if there's a problem. This is a beautiful thing.


----------



## m3s

I usually buy computer type equipment directly from an online computer store but it depends. I avoid box stores they sell some watered down models and they give you a hard time with warranty unless you bought their bs warranty

I mostly perimeter shop grocery stores now (avoiding processed food in the aisles) and I get some packaged food from amazon. The few times I returned something on amazon, I got a full refund with a short chat. I never had to ship anything back so far. People have abused amazon's return policy it's so easy (same with stores)

I tend to live in quieter areas away from stores so it's a huge convenience to not travel to stores and smell the people of walmart etc. Even a short drive to a store will burn at least an hour of your day. It's like banking. Much easier to make few taps than set aside time to park, stand in line etc. Yet you see people who can't break away from how they did things for most of their life

There are people living in remote areas hours away from stores. For them amazon and online shopping is a no brainer. amazon honoured prime shipping in alaska and we all agreed they must be losing money there


----------



## kcowan

m3s said:


> There are people living in remote areas hours away from stores. For them amazon and online shopping is a no brainer. amazon honoured prime shipping in alaska and we all agreed they must be losing money there


A good friend moved from The Beach in Toronto to Thornbury, and they shop online as much as possible. Service to their door is excellent. For fresh produce, they have a 4km drive to Thornbury.


----------



## james4beach

james4beach said:


> At the risk of looking foolish in another couple of years, I'm going to say that AMZN now looks to me like it might shortable around $1777. For the time being, I'm bearish on AMZN.
> 
> I'm saying this based on technical analysis (TA), with the technique used by O'Neil of Investor's Business Daily. You will have to read his publications for a thorough description, but I see the following pattern in AMZN:


Continues looking bearish I think. The stock recovered from a recent high volume drop, but continues to fail to rally above its 200 day moving average. There just isn't any oomph.

QQQ is hitting new all time highs but AMZN isn't coming along for the ride.

Could be a buying opportunity, but I lean towards thinking it's more likely to drop. Each month without a new all time high increases the probability of a very sharp decline. I believe this occurs when momentum investors/greedy latecomers lose faith and dump shares.


----------



## Topo

The market and tech sector keep going up, but AMZN seems stuck in the 1700s for about four months.


----------



## james4beach

Topo said:


> The market and tech sector keep going up, but AMZN seems stuck in the 1700s for about four months.


Yes, AMZN is lagging the market. Plotting AMZN against QQQ, one can see that it's been lagging for 6 months now.

Amazon reports earnings after the close today. This could be a noteworthy event, worth paying attention to.

If it turns downward and closes the week below 1825, this would be very bearish.


----------



## james4beach

Currently up 9% after hours at $2040 or so, just exceeded $1 TRILLION market cap. Fun to watch.

https://finance.yahoo.com/quote/AMZN?p=AMZN


----------



## MrMatt

james4beach said:


> Yes, AMZN is lagging the market. Plotting AMZN against QQQ, one can see that it's been lagging for 6 months now.
> 
> Amazon reports earnings after the close today. This could be a noteworthy event, worth paying attention to.
> 
> If it turns downward and closes the week below 1825, this would be very bearish.


Stock price variation over short periods of times is not interesting to me.
Look at AMZN over the last 5years

Speculative equity, like AMZN is going to be volitile.


----------



## doctrine

doctrine said:


> It looks more neutral to slightly positive to me, like it is more converging. There is not a trend of lower lows, even if a new high hasn't been reached, and the 200 day moving average is still moving higher. A very interesting technical point with the stock trying to break through both the 50 day and 200 day. I wouldn't want to be in the stock short term if it dropped below $1700, but it could easily try to test the high for the 3rd time.
> 
> My take is the trade would be long at $1777 with a sell below $1700 but potentially hold to $1950-2000, presenting a good risk/reward with a relatively good clear sell target only 5% below current price. Upside 10-20% vs 5% downside is a trade many would take. I could also be wrong but that's what I see.


I believe I called this correctly. Amazon never closed below $1700 and now it's in all-time high territory after hours which is sure to be sustained. Looks good and all of the FAANG results plus others like MSFT and TSLA may push S&P 500 back into record high territory. Record highs are always bullish signs. American tech is continuing to kill it.


----------



## m3s

doctrine said:


> American tech is continuing to kill it.


Aint seen notin yet. SpaceX just launched another 60 autonomous Starlink small sats. Could be online this year


----------



## james4beach

I have no position in AMZN. So far it doesn't appear to be playing out in the bearish scenario I thought... in any case, I profit from this. I hold a pretty large amount of the S&P 500 and AMZN is a whopping 2.87% of the index.


----------



## Saniokca

We have 30 shares left  Used to be 60 but we realized some profits. Bought at $300!


----------



## marina628

I keep buying and buying it is 22% of my holdings now.Pretty much Amazon ,Apple, Microsoft WHAT I am stashing.


----------



## james4beach

james4beach said:


> I am not short the stock because I don't have any room in my investment plan for ad hoc speculation (maybe some time when I have more money). However, if I did short this at $1777, I would cover only if it rallied 23% from here = $2186 as the stop


Interestingly, AMZN has not yet reached my stop price, though it got awfully close!

So hypothetically, if I had gone short at $1777, I would still be short today. I am also starting to suspect that part of that amazing pop up above $2000 was a short covering rally which makes me think it was a temporary effect.

(But in fact I am long, not short, since AMZN is 3.2% of the S&P 500 index)



marina628 said:


> I keep buying and buying it is 22% of my holdings now.Pretty much Amazon ,Apple, Microsoft WHAT I am stashing.


You don't diversify your equities beyond tech? That's a very high concentration in single stocks.


----------



## MrMatt

james4beach said:


> Interestingly, AMZN has not yet reached my stop price, though it got awfully close!
> 
> So hypothetically, if I had gone short at $1777, I would still be short today. I am also starting to suspect that part of that amazing pop up above $2000 was a short covering rally which makes me think it was a temporary effect.
> 
> (But in fact I am long, not short, since AMZN is 3.2% of the S&P 500 index)
> 
> 
> 
> You don't diversify your equities beyond tech? That's a very high concentration in single stocks.


I had too much % in Google a while ago, so I pruned a bit.... kind of wished I didn't.


----------



## james4beach

AMZN continues to fall pretty hard today, back below $2000


----------



## Ponderling

Added to the AMZN position today, taking advantage on some current price weakness. My wife started with 10 shares back at $800US. Boy have they sailed. Today the price was under 4K, but I think they still have a lot of good runway in front of them but maybe are not moving quite as fast in the years to come. 

I see them as kind of like a mutual fund after a good year back in the 80s. The new money would pour in during RRSP season and fund managers back then are like 'where can we invest all of the new money' ?


----------



## MrMatt

I think Amazon will basically totally dominate retail.
They provide a commodity service FAR better than anyone else.

That being said, they do so at low profit.
Their big profit engine is in cloud computing, which they are in a fight with MSFT and GOOG for dominance.

I think GOOG has some truly interesting tech, Amazon has a lot, MSFT understands that developers are key.
I will be buying some MSFT stock because of this.


----------



## bgc_fan

Looks like it's official, Amazon is buying MGM. So now James Bond belongs to Amazon.








Amazon to buy MGM Studios for $8.45 billion


The deal emphasizes Amazon's willingness to spend deeply to remain competitive in a crowded streaming market.




www.cnbc.com


----------



## sags

We have Amazon Prime and this is great news for us.

We also have Netflix, so this move will force them to buy more content as well.


----------



## MrMatt

sags said:


> We have Amazon Prime and this is great news for us.


I'm surprised that there are still people who don't have it.


----------



## Spudd

MrMatt said:


> I'm surprised that there are still people who don't have it.


For me the free shipping is good enough, and I don't need the streaming service. Why should I pay $80/year or whatever it costs?


----------



## nathan79

MrMatt said:


> I'm surprised that there are still people who don't have it.


I personally had it for a year, but I found that the 2-day shipping wasn't much (or any) faster than the regular free "super saver" shipping. Maybe it's because I live near a hub. Perhaps the regular free shipping is slower in rural areas. 

The only streaming service I have is Netflix. I only watch a few hours a month, but roommate uses it more. My theory is that a lot of people get these services and then only use them a few hours each month, if that. The cost really adds up... Netflix, Prime and Disney+ combined works out to nearly $35 a month. Throw in HBO Max while your at it, and suddenly you're spending $50 a month just on streaming services. How many hours a day are you watching TV? That's in addition to your internet bill, and any other services such as cable/satellite, gaming subscriptions, and cell phone data packages.


----------



## MrMatt

nathan79 said:


> I personally had it for a year, but I found that the 2-day shipping wasn't much (or any) faster than the regular free "super saver" shipping. Maybe it's because I live near a hub. Perhaps the regular free shipping is slower in rural areas.
> 
> The only streaming service I have is Netflix. I only watch a few hours a month, but roommate uses it more. My theory is that a lot of people get these services and then only use them a few hours each month, if that. The cost really adds up... Netflix, Prime and Disney+ combined works out to nearly $35 a month. Throw in HBO Max while your at it, and suddenly you're spending $50 a month just on streaming services. How many hours a day are you watching TV? That's in addition to your internet bill, and any other services such as cable/satellite, gaming subscriptions, and cell phone data packages.


Don't they still have minimum orders for free shipping? like $35 or something?

Honestly I end up watching 2-3 movies a year, maybe 1 or two series on Amazon, and don't think about shipping fees when I order. I think it's worth it.


----------



## nathan79

MrMatt said:


> Don't they still have minimum orders for free shipping? like $35 or something?
> 
> Honestly I end up watching 2-3 movies a year, maybe 1 or two series on Amazon, and don't think about shipping fees when I order. I think it's worth it.


Yeah, the $35 minimum is the biggest disadvantage to not using Prime. I just wait to place my order until I have enough in my cart to meet the threshold. This can either be a good thing (delay gratification) or a bad thing (enticing people to spend more in order to get the free shipping). It depends on the personality of the individual.


----------



## MrMatt

nathan79 said:


> Yeah, the $35 minimum is the biggest disadvantage to not using Prime. I just wait to place my order until I have enough in my cart to meet the threshold. This can either be a good thing (delay gratification) or a bad thing (enticing people to spend more in order to get the free shipping). It depends on the personality of the individual.


For me, it means I don't have to spend 1/2 hour driving to the store. Or even just the 10 minute detour driving home from work... back when I drove into an office.

Honestly even the trivial $5-8 shipping lots of companies charge, it's not worth my time, they can just deliver it. It's likely better for the environment anyway. For amazon it clearly is, a minivan full of stuff barely makes it down the street before it's empty.


----------



## andrewf

MrMatt said:


> For me, it means I don't have to spend 1/2 hour driving to the store. Or even just the 10 minute detour driving home from work... back when I drove into an office.
> 
> Honestly even the trivial $5-8 shipping lots of companies charge, it's not worth my time, they can just deliver it. It's likely better for the environment anyway. For amazon it clearly is, a minivan full of stuff barely makes it down the street before it's empty.


Delivery is pretty energy intensive. You only see the van at the last mile. There are many trucks and even aircraft in the middle mile.


----------



## MrMatt

andrewf said:


> Delivery is pretty energy intensive. You only see the van at the last mile. There are many trucks and even aircraft in the middle mile.


And the vast majority of energy expenditure is in the last mile.
Lots of studies on this, it's very interesting.


----------



## peterk

We had prime for a while, but cancelled last year. The shipping didn't seem to be affected. I suspect that prime subscriptions are are a significant enough number now and the shipping methodology has matured and centered around prime service. It's now sensible to freeload and not pay for prime but still get prime-esque shipping.


----------



## andrewf

I have prime, but more for the streaming video. I am pretty indifferent to the free shipping. I don't put much value on it. My family shares streaming video membership (one of us pays for Netflix, I pay for Prime, someone else pays for HBO etc.)


----------



## MrMatt

peterk said:


> We had prime for a while, but cancelled last year. The shipping didn't seem to be affected. I suspect that prime subscriptions are are a significant enough number now and the shipping methodology has matured and centered around prime service. It's now sensible to freeload and not pay for prime but still get prime-esque shipping.


Likely true, but for the low fee, I like the convenience of not thinking about it.
Plus occasionally they have some good shows.


----------



## MrMatt

Well Amazon dropped again, buying opportunity?


----------



## marina628

james4beach said:


> Interestingly, AMZN has not yet reached my stop price, though it got awfully close!
> 
> So hypothetically, if I had gone short at $1777, I would still be short today. I am also starting to suspect that part of that amazing pop up above $2000 was a short covering rally which makes me think it was a temporary effect.
> 
> (But in fact I am long, not short, since AMZN is 3.2% of the S&P 500 index)
> 
> 
> 
> You don't diversify your equities beyond tech? That's a very high concentration in single stocks.


James i am 90% equities just seen this now


----------



## marina628

MrMatt said:


> Well Amazon dropped again, buying opportunity?


it fell amount 10% this month so I say it is a buying opportunity.


----------



## james4beach

marina628 said:


> James i am 90% equities just seen this now


Yeah that's a lot of equities. Have you considered diversifying into other assets as well?


----------



## londoncalling

down 7% today! just market noise? reversion to the mean? random occurence?


----------



## Jimmy

londoncalling said:


> down 7% today! just market noise? reversion to the mean? random occurence?


They released earnings yesterday and missed some estimates.


----------



## marina628

james4beach said:


> Yeah that's a lot of equities. Have you considered diversifying into other assets as well?


James I can tolerate the risk for reward , I have significant assets no debts .I have been in most of the Tech stocks since the IPO days.


----------



## MrBlackhill

AMZN is raising its base pay cap from $160k to $350k, more than doubling it.


----------



## Ponderling

Price has slid with all other us stock sell offs, except for miners. But we hold about 50k of this thing. Usually limit ourselves to no more than 16k in a single company, but here AMZN is like a whole ecosystem too big to ignore.


----------



## m3s

I just skimmed through this thread and it's +10 years of CMF being collectively wrong

Lots of comparisons to BTC and tulip mania etc. I think what everyone missed was the distortion of easy monetary policies. Combined with the economies of scale of such a massive addressable market.

Combined with Canada lagging US adoption. We have amazon delivery trucks here now. They text a photo immediately of delivered parcels. I don't even have to print or pack anything to make a return

This thread is a great case study of how people can be in denial of what is happening in plain sight for years


----------



## MrMatt

m3s said:


> I just skimmed through this thread and it's +10 years of CMF being collectively wrong
> 
> Lots of comparisons to BTC and tulip mania etc. I think what everyone missed was the distortion of easy monetary policies. Combined with the economies of scale of such a massive addressable market.
> 
> Combined with Canada lagging US adoption. We have amazon delivery trucks here now. They text a photo immediately of delivered parcels. I don't even have to print or pack anything to make a return
> 
> This thread is a great case study of how people can be in denial of what is happening in plain sight for years


I think it was a mix of opinions, with some real insight.

You have to remember that Amazon still charged delivery fees to everyone 10 years ago, it was a different customer experience.

I remember thinking back then, Amazon could have easily bought the Sears delivery network in Canada and gotten next day depot delivery across the country in no time. They actually did do that strategy with their various locker systems etc.

The other thing you miss on a discussion forum is that it should be a sharing of ideas and perspectives, a wide variety of interpretations and analysis is a great value IMO.


----------



## MrMatt

Reacher.
Just got to say, I didn't know if Amazon was serious about streaming, or if they just want to have the entertainment storefront to sell more.

In any case, their Reacher series is amazing. I wonder what they're going to Prime going forward. Are they going to try and squash Netflix?


----------



## nobleea

MrMatt said:


> Reacher.
> Just got to say, I didn't know if Amazon was serious about streaming, or if they just want to have the entertainment storefront to sell more.
> 
> In any case, their Reacher series is amazing. I wonder what they're going to Prime going forward. Are they going to try and squash Netflix?


Reacher might be next on my watch list. Currently going through all of The Expanse (for a second time), so that I can finish off with the final season.


----------



## MrMatt

nobleea said:


> Reacher might be next on my watch list. Currently going through all of The Expanse (for a second time), so that I can finish off with the final season.


Well the casting is good too, Alan is a good choice, and plays the character well.

Also Malcolm Goodwin is an excellent actor


----------



## londoncalling

Amazon raising price of Prime membership for new and current members (yahoo.com) 

forgot to post this when I first read it. This should buoy upcoming quarterly reports.


----------



## andrewf

m3s said:


> I just skimmed through this thread and it's +10 years of CMF being collectively wrong
> 
> Lots of comparisons to BTC and tulip mania etc. I think what everyone missed was the distortion of easy monetary policies. Combined with the economies of scale of such a massive addressable market.
> 
> Combined with Canada lagging US adoption. We have amazon delivery trucks here now. They text a photo immediately of delivered parcels. I don't even have to print or pack anything to make a return
> 
> This thread is a great case study of how people can be in denial of what is happening in plain sight for years


I think what people tend to miss is than AMZN is almost entirely AWS and the retail business has close to zero value.


----------



## m3s

andrewf said:


> I think what people tend to miss is than AMZN is almost entirely AWS and the retail business has close to zero value.


Maybe low revenue but I disagree about value. Data is valuable especially data on consumer behaviour and trends.

People under appreciate the value of data. Amazon can influence you just like google with data. They also undercut the small businesses that survived Walmart. Amazon has sacrificed revenue for decades to become a behemoth. I remember 7 or 8 years ago posting how there were piles of amazon packages at all the US hotels. Everyone on here just complained how amazon sucks in Canada

Canada is just lagging in change and awareness of what is changing by about 5 years. Even today I don't think amazon Canada has the same variety of products


----------



## andrewf

From what I gather, Amazon's retail business is only profitable due to search (third party sellers buying top of search placement). But, if you value the business units of Amazon, AWS represents essentially all the value of AMZN. Maybe if they spin out AWS it would reduce the conglomerate discount and make the retail business not worth essentially nil.

Amazon will never put the kind of effort into the Canadian market that they put into the US market. They will copy and paste what is shown to work in the US, but later and worse.


----------



## MrMatt

andrewf said:


> From what I gather, Amazon's retail business is only profitable due to search (third party sellers buying top of search placement). But, if you value the business units of Amazon, AWS represents essentially all the value of AMZN. Maybe if they spin out AWS it would reduce the conglomerate discount and make the retail business not worth essentially nil.
> 
> Amazon will never put the kind of effort into the Canadian market that they put into the US market. They will copy and paste what is shown to work in the US, but later and worse.


I think the Amazon logistics system, by running at near cost gives them an insurmountable moat. 
If you're selling "mail order", Amazon FBA is the obvious choice, you're not going to be faster or cheaper.

I'm not sure what the plan for Amazon video productions are, but they're good, high budget productions.


----------



## MrMatt

Okay, Amazon Movies/TV, what's going on?

They took over the Jack Ryan series, did it exceptionally well.
They did Reacher.. again excellent job
Now they're doing Lord of the Rings, which is insanely ambitious, Peter Jackson really set the standard with that series.

what are they trying to do? Create a video entertainment division? 
I think this could be a good idea, you go to Amazon, then watch free of paid content, and they've got enough good content to install the App.

Also I think it's a great idea to take some longer running series (ie Tom Clancy/Lee Child) as they provide near endless storylines that are already written.

But with Apple buying up Foundation (big fan, I'd consider trying Apple TV just to get access to that)

Are they trying to buy Prime subscribers?
I'm looking at my spending, it's Walmart, Amazon & Costco.
Homedepot for house repairs.


----------



## Covariance

MrMatt said:


> Okay, Amazon Movies/TV, what's going on?
> 
> They took over the Jack Ryan series, did it exceptionally well.
> They did Reacher.. again excellent job
> Now they're doing Lord of the Rings, which is insanely ambitious, Peter Jackson really set the standard with that series.
> 
> what are they trying to do? Create a video entertainment division?
> I think this could be a good idea, you go to Amazon, then watch free of paid content, and they've got enough good content to install the App.
> 
> Also I think it's a great idea to take some longer running series (ie Tom Clancy/Lee Child) as they provide near endless storylines that are already written.
> 
> But with Apple buying up Foundation (big fan, I'd consider trying Apple TV just to get access to that)
> 
> Are they trying to buy Prime subscribers?
> I'm looking at my spending, it's Walmart, Amazon & Costco.
> Homedepot for house repairs.


Their actions make a lot of sense as a strategy. Ensure the customer values prime for more than free shipping, keeps coming back, and pays the membership fee. Unlike Netflix, they can break even or lose money on the shows but make profit on other aspects of the customer relationship. Apple are similarly positioned to Amazon in this respect.


----------



## MrMatt

Covariance said:


> Their actions make a lot of sense as a strategy. Ensure the customer values prime for more than free shipping, keeps coming back, and pays the membership fee. Unlike Netflix, they can break even or lose money on the shows but make profit on other aspects of the customer relationship. Apple are similarly positioned to Amazon in this respect.


I don't get the Apple comparison, the closest is you buy an Apple device and then you use the Apple store and Apple services. But in the Apple case that's more lock in and anti-competative than offering more value.

On my Android I have both the Google and the Samsung App stores i can buy apps from whichever one suits me best, I can even install the Amazon app store (or sideload others).
Similarly on Windows I can use Microsoft Store, Epic, ValveSteam, and others.

I'm hoping courts will break the stranglehold Apple has on their platform, it will be good for consumers (not as good for my retirement though).


I do think Amazon could run their consumer division like Costco, make money on the membership fee, run everything else at cost/razor thin margins.

I've recently read that Amazon now delivers more packages than Fedex (in the US), and Amazon gets about $4.28/package vs $12-18 for the couriers.
It would be really hard for anyone to compete with that logistic system. As a retailer, you can't cover the $10 cost advantage of Amazon.

But yes, I see huge value in Prime.
I get fast 'free" shipping, free Apps for my phone, a selection of free high quality video, and buying/renting other choices is right there in the same app. 
Even at this insane valuation I'm thinking of buying more stock, though I've been wanting to pick up a bit of MSFT for a while.


----------



## Covariance

MrMatt said:


> I don't get the Apple comparison, the closest is you buy an Apple device and then you use the Apple store and Apple services. But in the Apple case that's more lock in and anti-competative than offering more value.


Regarding Apple. It's not about the store. It's about how the services make whole product solutions. Two dimensions. First, their services are often available free for some period of time when one purchases a device. For instance, Apple TV+ (their shows) is free for three months when one buys any new device. Second, desirable and carefully curated services that illustrate the performance of a device make it seem to be worth more. Music and great videos show case the superior screen and audio performance (for free during the promotional period). A watch with fitness classes built in (another free trial) that are easy to use and report your data clearly makes it seem to be more capable than just any smartwatch that takes your pulse.


----------



## MrMatt

Covariance said:


> Regarding Apple. It's not about the store. It's about how the services make whole product solutions. Two dimensions. First, their services are often available free for some period of time when one purchases a device. For instance, Apple TV+ (their shows) is free for three months when one buys any new device. Second, desirable and carefully curated services that illustrate the performance of a device make it seem to be worth more. Music and great videos show case the superior screen and audio performance (for free during the promotional period). A watch with fitness classes built in (another free trial) that are easy to use and report your data clearly makes it seem to be more capable than just any smartwatch that takes your pulse.


Most platforms offer free trials.

Cloud development does even better with most services offering an "always free" baseline level of service.
AWS, Azure, GCP, Oracle (Amazing free tier BTW)

I think Apple does a good job of cross device integration, it's much more fragmented in the Android/PC world.
I think their level of lock might allow them to get lazy, Microsoft and Blackberry got lazy and paid a price, MSFT recovered, BB didn't.
As an Apple shareholder, I'm concerned that they'll get content with their captive market.


That being said, I just got a Google TV/Chromecast device, and it's wonderful.
I add all my services (Youtube, netflix, Disney, Amazon, AppleTV) and they all show up on a single screen

I think Amazon is trying to make themselves the portal to online retail, including entertainment services. 
Just like Google and Apple are trying to do.


----------



## Raggedy Dandy

Does anyone see any fundamental difference (besides the obvious) between the Canadian and US AMZN shares? There is 2 orders of magnitude difference in share price, but they have tracked each other almost 1:1 since the Canadian shares were listed last year. With the US ones you have the benefit/penalty of currency exchange, but is there any preference for one over the other which I'm missing?


----------



## MrMatt

Raggedy Dandy said:


> Does anyone see any fundamental difference (besides the obvious) between the Canadian and US AMZN shares? There is 2 orders of magnitude difference in share price, but they have tracked each other almost 1:1 since the Canadian shares were listed last year. With the US ones you have the benefit/penalty of currency exchange, but is there any preference for one over the other which I'm missing?


You're not buying Amazon shares you're buying CDR, most of which appear to be hedged.
I don't see the point, but some people like to mix in currency hedging with their investing.

I'd only buy an ADR or CDR when it's difficult to buy the actual stock


----------



## Ponderling

But do remember that the CDR in this case lets you get a bit of this one if you do not have thousands to invest.


----------



## MrMatt

Ponderling said:


> But do remember that the CDR in this case lets you get a bit of this one if you do not have thousands to invest.


If you don't have the $3k to buy a share, maybe tyou shouldn't be investing in individual stocks, buy an index fund.


----------



## Ponderling

Yah, I guess we are an outlier. We knew we were into investing for about 15 years before any serious draw down, so bought a whack of individual stocks to save the ETF mer, which 15 years ago was not near zero like it is now. So we have a current passel of about 75 stocks with the average holding being about $12K at present. So kinda like a home brewed etf, 

AMAZ though counts for about three companys worth of holdings, so we have worked our way up to 15 shares, after the first 10 were bought over 10 years ago.


----------



## Raggedy Dandy

MrMatt said:


> You're not buying Amazon shares you're buying CDR, most of which appear to be hedged.
> I don't see the point, but some people like to mix in currency hedging with their investing.
> 
> I'd only buy an ADR or CDR when it's difficult to buy the actual stock


Thanks for that. I wasn't aware of how these (handful of US companies) were structured, but did a bit of reading into it, and understand now.

Thanks!


----------



## james4beach

I'm seriously thinking of taking a short position in AMZN here, around $3280


----------



## MrMatt

james4beach said:


> I'm seriously thinking of taking a short position in AMZN here, around $3280


Why? Their retail revenue is still somewhere around half of Walmart, lots of room to grow.

If I'm looking for something often Amazon is my first stop.

They're also taking big bets in a number of fronts, particularly media
I think the long term prospects for Amazon are great.

AWS is a nice profit center, but I think Microsoft is being very aggressive with some success. I'm not quite as confident here.


----------



## james4beach

MrMatt said:


> Why? Their retail revenue


It's been a high momentum, beloved tech stock that everyone has piled into. It's a crowded trade and way too popular.

Their PE (even their forward PE) is far too high for a maturing company. It's ludicrously high actually. If this becomes a low growth or recessionary environment, this stock -- like all large cap tech -- is way overvalued.


----------



## m3s

MrMatt said:


> Most platforms offer free trials.
> 
> Cloud development does even better with most services offering an "always free" baseline level of service.
> AWS, Azure, GCP, Oracle (Amazing free tier BTW)
> 
> I think Apple does a good job of cross device integration, it's much more fragmented in the Android/PC world.
> I think their level of lock might allow them to get lazy, Microsoft and Blackberry got lazy and paid a price, MSFT recovered, BB didn't.
> As an Apple shareholder, I'm concerned that they'll get content with their captive market.
> 
> 
> That being said, I just got a Google TV/Chromecast device, and it's wonderful.
> I add all my services (Youtube, netflix, Disney, Amazon, AppleTV) and they all show up on a single screen
> 
> I think Amazon is trying to make themselves the portal to online retail, including entertainment services.
> Just like Google and Apple are trying to do.


Apple does the same. I think it's 5GB free and $1/month for 50GB except it's encrypted and not data mined like google. Then they have bundles for family and all the music/TV/news/fitness services.

I've been using Apple TV without any subscription for many years. It also does all those streaming services from a single device including local news, CBC app, and streams anything from my PC. It has the smoothest interface and syncs my home theatre perfectly

Apple iCloud also integrates seamlessly with Windows. I use Windows, Apple and Linux. I don't need to side-load iOS because it always has more apps than anything else anyways. I used to jailbreak but it defeats the protected system. I don't trust my Windows machine anywhere close to a Mac OS

I get spotify, netflix, prime and hulu free but I barely use any of them. I pay Apple $1/month but I could just store it all on Google drive for free if I didn't care about privacy. I've considered upgrading to their combo plan but again I don't need more services I barely use

You can use all the Google services, Spotify and amazon and everything else on iOS and TVOS etc so it's not captive anymore


----------



## andrewf

MrMatt said:


> Why? Their retail revenue is still somewhere around half of Walmart, lots of room to grow.


Most of Amazon's value is AWS. The retail business is not particularly profitable and not worth a whole lot.


----------



## MrMatt

andrewf said:


> Most of Amazon's value is AWS. The retail business is not particularly profitable and not worth a whole lot.


But Amazon is nearly the online store monopoly, it's very hard for anyone to replicate their logistics system.
I also hold Walmart for a reason.

I think AWS is very vulnerable to Microsoft.

It might be a bit rich, but I think it's at worst a hold.


----------



## m3s

I wouldn't underestimate the value of retail data that amazon has

They can adjust their own retail based on the habits they can see from data. This is why retail stores have loyalty cards - for the retail data

Same with Spotify and music data and all the streaming services. Much better consumer data when you can see what people rewatch and partially watch etc

FAANG is all about the data


----------



## MrMatt

m3s said:


> I wouldn't underestimate the value of retail data that amazon has
> 
> They can adjust their own retail based on the habits they can see from data. This is why retail stores have loyalty cards - for the retail data
> 
> Same with Spotify and music data and all the streaming services. Much better consumer data when you can see what people rewatch and partially watch etc
> 
> FAANG is all about the data


That's actually one of the antitrust arguments against Amazon.

Really just look where they have Amazon Basics, they're not just guessing what to invest in.


----------



## m3s

All data and code should be open source and transparent imo

Elon Musk doesn't patent any of his tech and he's doing just fine. He bought 9% of Twitter because they were controlling too much and also not even controlling the bots and spam. Same problem with "Meta" A few companies should not have so much control

Web3 and blockchain is an attack on the FAANG oligarchy that controls and profits off the vast majority of our data. The reason it can grow so fast is because of the hive mind collaboration of open source data and code


----------



## MrMatt

m3s said:


> All data and code should be open source and transparent imo


No
But go ahead, share all your credit card statements if you really believe this.


----------



## zinfit

m3s said:


> All data and code should be open source and transparent imo
> 
> Elon Musk doesn't patent any of his tech and he's doing just fine. He bought 9% of Twitter because they were controlling too much and also not even controlling the bots and spam. Same problem with "Meta" A few companies should not have so much control
> 
> Web3 and blockchain is an attack on the FAANG oligarchy that controls and profits off the vast majority of our data. The reason it can grow so fast is because of the hive mind collaboration of open source data and code


. One thing with Amazon that shouldn't be overlooked is their success in cloud computing. They are the leader it is growing at a great pace and it is extremely profitable. This is also the case with Microsoft and to a lesser extent with Google.


----------



## m3s

amazon had the US government cloud computing contract

Trump changed it to Microsoft allegedly because of the Bezos/WashPo connection

As a user of that contract it went downhill with microsoft. It's just like switching from apple to microsoft

Things that just worked transparent to the user are now a daily nuissance


----------



## james4beach

james4beach said:


> I'm seriously thinking of taking a short position in AMZN here, around $3280


I decided to stick with my passive asset allocation, instead of speculating on individuals shares.

If I had been short, I would probably cover at least half the position here around $2819 or on the next weak day in the market. That would have been a quick 14% profit.

I'm trying to avoid the temptation to speculate on individual stocks like this as it's probably healthier to keep focused on passive investing.


----------



## james4beach

lol, I spoke too soon. AMZN plummeted 9% after hours, disastrous.

AMZN still has a very weak looking chart.


----------



## londoncalling

Down 12% this morning. I have always thought the stock was overpriced but like the business model.


----------



## james4beach

londoncalling said:


> Down 12% this morning. I have always thought the stock was overpriced but like the business model.


I think it's been overvalued for years, but that's also symptomatic of the past bull market cycle where everyone was gaga about tech, and willing to pay crazy multiples for it.

If we're shifting to an environment of tightening liquidity and NON extreme multiples for tech, AMZN and many tech stocks are going to fall considerably.

It's really all about the P/E multiples. They have been extremely high in tech for many years now and AMZN has been kind of a poster child for that.


----------



## londoncalling

Down 35% from 52 week high and still overpriced in my opinion. After many years of overperformance it is unlikely for the sector to achieve similar results. There will be some stocks that will do well going forward. I am waiting for the sector to go lower before initiating a position in any of them. As you stated it is really about P/E multiples especially in a declining market.


----------



## MrMatt

james4beach said:


> I think it's been overvalued for years, but that's also symptomatic of the past bull market cycle where everyone was gaga about tech, and willing to pay crazy multiples for it.
> 
> If we're shifting to an environment of tightening liquidity and NON extreme multiples for tech, AMZN and many tech stocks are going to fall considerably.
> 
> It's really all about the P/E multiples. They have been extremely high in tech for many years now and AMZN has been kind of a poster child for that.


PE of somewhere around 45, for a company thats still growing pretty well is a bit rich, but even if it slows I'm happy with the long term prospects.


----------



## marina628

I bought Amazon yesterday and Today LOL Blame me for the fall


----------



## Gator13

marina628 said:


> I bought Amazon yesterday and Today LOL Blame me for the fall


Wait until I buy more. That will be the bottom. 😂


----------



## richno

marina628 said:


> I bought Amazon yesterday and Today LOL Blame me for the fall


Same. 🤚


----------



## londoncalling

Share price hovering just above $2100 and down significantly (>40%) from its 52 week high at $3773. With P/E in the low 50s is this a more reasonable valuation? It doesn't seem to be that screaming of a deal as the P/E was in the 40s earlier this year. I am looking to start a position but have difficulty pricing growth stocks.

Amazon.com Inc PE Ratio (TTM) Historical Data | AMZN - GuruFocus.com


----------



## zinfit

I think their growth is stalling out. They have acknowledged that they have overbuilt their warehouse capacity.There cloud business is very strong and profitable. They still dominant on line retailing and that won't change.People that regularly use Amazon are very loyal to it. They might have to increase their prices and fees a bit. I don't think that will hurt them.


----------



## m3s

zinfit said:


> People that regularly use Amazon are very loyal to it. They might have to increase their prices and fees a bit. I don't think that will hurt them.


Walmart really stepped up their online shopping in the US during the pandemic

Now that amazon increased the price for prime I started using Walmart and they ship faster (typically from the local Walmart) Also easy enough to drive the 30 mins for a return etc

amazon went the opposite direction. A lot of good stuff I used to buy kept going out of stock, price increases etc


----------



## zinfit

m3s said:


> Walmart really stepped up their online shopping in the US during the pandemic
> 
> Now that amazon increased the price for prime I started using Walmart and they ship faster (typically from the local Walmart) Also easy enough to drive the 30 mins for a return etc
> 
> amazon went the opposite direction. A lot of good stuff I used to buy kept going out of stock, price increases etc


Depends were you live. I am close to Calgary and I usually get my deliveries next day. I haven't had the positive experience you have had with Walmart. I don't like driving to their stores for my pickups. Anyways their financials don't show any decline in their sales. Perhaps some slowing growth. Their cloud business is a juggernaut . If gas prices keep going up I can see people preferring Amazon then driving to stores.


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## m3s

Yea I meant Walmart US. Completely different.

They deliver faster than amazon here and amazon is faster here than most of Canada. Maybe major cities in Canada are different

Pre-pandemic amazon had same day amazon fresh delivery from say Whole Foods


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## MrMatt

m3s said:


> Yea I meant Walmart US. Completely different.
> 
> They deliver faster than amazon here and amazon is faster here than most of Canada. Maybe major cities in Canada are different
> 
> Pre-pandemic amazon had same day amazon fresh delivery from say Whole Foods


I think walmart Grocery delivery is simply doordash or some other service.
It sucks.

I do pickup, because they actually provide some sort of training to the shoppers who gather your order.
I don't think the delivery guys are the same, as our delivered orders are a disaster.

As far as Amazon, they're adding a warehouse in London, and we have at least 1 depot.


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## londoncalling

Amazon sees resilient consumer demand as shares jump 13% | Reuters 

Quite a jump in after hours market. I have a longstanding order for AMZN that now looks out of reach. May need to turn my attention to APPL which saw a reasonable climb (3%+ )on its release. INTC on the other hand did not do so well (over -9%).


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## Covariance

londoncalling said:


> Amazon sees resilient consumer demand as shares jump 13% | Reuters
> 
> Quite a jump in after hours market. I have a longstanding order for AMZN that now looks out of reach. May need to turn my attention to APPL which saw a reasonable climb (3%+ )on its release. INTC on the other hand did not do so well (over -9%).


AMZN's cloud business is carrying the day. Fears of slow down over blown. 

Perhaps for a different thread - INTC lines of business are concentrated in PCs and servers. After the growth of PC units sold/shipped in '20, '21 I expect we will see sequential decline in PCs for at least 2 years until it recovers the long run trend line.


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## james4beach

Amazon AWS was doing something really weird this summer. They had an extreme shortage of people and were throwing around large numbers (for experienced, senior engineers).

One of my friends got a job for 450K total compensation, another is over 500K.
Others told me that it's possible to get a job at 600K to as high as 900K total comp.

In the summer, I attended a party where a friend (an Amazon manager) drunkenly told me that I could probably land a job there at 600K too 700K.

I didn't believe him. The numbers seemed ludicrously high so I started looking into this. It was for real. Even though much of this is stock options, Amazon actually was paying cash in the first year or two to "top up" people, and people really were making figures like $700,000 cash salary in the first year.

Anyway... that appears to have been a short lived opportunity that I already missed. Maybe Amazon got carried away with the hiring, but I don't think they offer salaries anywhere close to that any more. One of my friends is very senior, coming directly from a competitor, and he's been going through the Amazon recruiting process for months now. He wants to hear a number over 600K but they haven't told him anything yet.

Personally I think this was an indicator of the *peak of the tech bubble*, the last hurrah before the crash in the whole sector. I mean what company in their right mind would pay a standard engineer $700,000 a year. The normal salary for those people is 150K to 200K.

The American mega cap tech stocks were ground zero for a lot of wealth creation, wealth effect through inflated equity. Everyone (including managers and executives) got carried away... that's what happens during bubbles.

Part of the reason these salaries went up so much is the competition for labour, against Venture-funded companies. So you'll get some crappy krypto koin start-up, funded by venture, offering employees like 500K a year total comp using stock. Back when all those silly tech stocks were inflated, 500K looked like 500K. But now that everything is crashing (IPOs are dead, VC is dead, SPACs are dead) what used to look like 500K is now only 100K in cash salary.

So Amazon/Google/Microsoft used to have to attract labour away from people working for these stupid VC-funded firms, and were forced to pay ludicrous salaries to hire anyone.

But now they no longer have to compete. The equity of most of those stupid firms has become worthless.


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## andrewf

Well in a way, I'd rather see more of the rents these companies collect accrue to 'labour' (albeit highly compensated engineers) instead of capital. I could have pursued this line of work, but it wasn't really a passion for me. And to collect those kinds of salaries you need to work in the eye-wateringly expensive markets on the US west coast where $400k-$600k doesn't really feel like as much as you might think.


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## james4beach

andrewf said:


> Well in a way, I'd rather see more of the rents these companies collect accrue to 'labour' (albeit highly compensated engineers) instead of capital. I could have pursued this line of work, but it wasn't really a passion for me. And to collect those kinds of salaries you need to work in the eye-wateringly expensive markets on the US west coast where $400k-$600k doesn't really feel like as much as you might think.


Oh yes absolutely, the cost of living is very high. And the jobs themselves absolutely suck. The guy I mentioned at 450K recently quit his job and returned to a lower paying job, because Amazon was too stressful and unpleasant. I know several people who have quit very high paying jobs at Amazon and Google.

Still though, at 500K or 600K, even with a high cost of living, you're really pulling in a lot of money.

Sometimes I kick myself for not pursuing it more aggressively though. Maybe I could have completely retired at this point.


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## andrewf

Amazon is famously an awful place to work. I have been approached to work for them as well, but from the folks I know that work there (in both software and operational roles), it sounds like a toxic culture. Seems designed to attract psychopaths. 

That said, Amazon is but one of the major tech companies one could work for.


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## james4beach

andrewf said:


> Seems designed to attract psychopaths.


I think several big tech companies are like that. I worked for a subsidiary of Intel and it was like that as well... full of psychopathic young men with big career ambitions, everyone selling out each other, people cracking from stress, people constantly getting fired and then suing the company.

Silicon Valley has a toxic culture. I tried it for a few years, and I'm not sure I would ever go back. Even though I'm making much less money now, I'm much happier.

There's also this horrible techno-libertarianism in Silicon Valley. A bunch of immoral people who think "anything goes" and anything that makes them money is fair game.


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## zinfit

Amazon is unexceptional and dominate business. Because it is trading at a PE of 60 it is hard to consider buying its stock. Especially with the overall market shrinkage in PE ratios.


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## londoncalling

I would buy it at 15-20% lower than current price. Not sure if it will get there. My guess is we see that kind of price drop there will be tons of equities on sale.


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## Saveching

would you buy AMC27X instead of its stocks then?


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## zinfit

londoncalling said:


> I would buy it at 15-20% lower than current price. Not sure if it will get there. My guess is we see that kind of price drop there will be tons of equities on sale.


the bear historians say a recession should be a 3200 S&P500 . If true we looking at another 10-15% decline.I would take Amazon at that level. They are an essential element in the day to day lives of millions.Buffet and Munger place a lot of value on a strong moat. Does Amazon have a strong moat?


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## james4beach

james4beach said:


> I'm seriously thinking of taking a short position in AMZN here, around $3280


In posts # 192 and # 194, I explained (April 6) why I had a bearish view on AMZN.

This fell even more than I expected. It's declined 50% this year!


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## MrBlackhill

londoncalling said:


> I would buy it at 15-20% lower than current price. Not sure if it will get there. My guess is we see that kind of price drop there will be tons of equities on sale.


It is now 25% lower.


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## sags

Lots of stocks "on sale" or has the fall from their highs been a normal decline from a big bubble ?

Just saying that every stock that fell in price isn't a bargain. Many were very overvalued based on hope and hype for the future of that company, and now reality has set in.

I like Amazon, have several subscriptions to them, and buy a lot from them, but they have big problems to solve in shipping costs and customer returns.

Having worked in a national warehouse I know how big a problem customer returns can be.

They have shipping costs both ways, consume valuable warehouse space, and must be managed by employees at a complete loss to the company.


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## londoncalling

MrBlackhill said:


> It is now 25% lower.


I took an initial position (just over 1%) at 90.63 and am currently down about 7%. I content to watch this one before adding more. I am currently sitting at 7-8% cash and waiting to see if the December slide will continue into the New year. Nobody knows if tech has bottomed and how long it will take to rebound. For me this is a long term play (10 years or more) Some are expecting a repeat of the tech crash where it took a decade for the survivors to take off again. If we have a deep long recession it could take a while for growth stocks to perform well.

@sags you are right that all sales aren't necessarily bargains. I think AMZN is big enough that it will navigate the current environment including the cost of returns. I think a change in policy couple with consumers being a bit more selective in their purchases will affect their bottom line but is important for both the consumer and the supplier. AMZN is not just a distribution company. They have a lot going on some will be profitable and some of which will not. I don't know which parts of the business those will be.


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## zinfit

londoncalling said:


> I took an initial position (just over 1%) at 90.63 and am currently down about 7%. I content to watch this one before adding more. I am currently sitting at 7-8% cash and waiting to see if the December slide will continue into the New year. Nobody knows if tech has bottomed and how long it will take to rebound. For me this is a long term play (10 years or more) Some are expecting a repeat of the tech crash where it took a decade for the survivors to take off again. If we have a deep long recession it could take a while for growth stocks to perform well.
> 
> @sags you are right that all sales aren't necessarily bargains. I think AMZN is big enough that it will navigate the current environment including the cost of returns. I think a change in policy couple with consumers being a bit more selective in their purchases will affect their bottom line but is important for both the consumer and the supplier. AMZN is not just a distribution company. They have a lot going on some will be profitable and some of which will not. I don't know which parts of the business those will be.


I think people overlook their leading position in cloud storage and computing. It is a growing and very profitable part of their operation. They are bigger than Microsoft in this department.


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## MrMatt

zinfit said:


> I think people overlook their leading position in cloud storage and computing. It is a growing and very profitable part of their operation. They are bigger than Microsoft in this department.


Yes, but I think MSFT is more focused on supporting developers, which is a bit of an advantage.


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