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Amazon already went through 2 downturns. Dot com bubble and the last recession. During the recession they faired extremely well. they've been facing tough comp

Amazon already went through 2 downturns. Dot com bubble and the last recession. During the recession they faired extremely well. they've been facing tough competition from Walmart since the late 90s. Alibaba is still miles away from competing in the same areas as Amazon although that will change with time. For now, if you're a consumer, aliexpress is only good for buying cheap low quality items. If there's something they've figured out, it's logistics and how to deliver a product as fast and cheap as possible. Everything about their system is optimized for this. Now with their venture into contract companies to deliver goods they can bypass more expensive UPS delivery. Now do I think they're stock is overvalued? Yes, but I don't see a doomsday scenario happening.

dkrich 10y ago
The difference to me is the valuation- during previous downturns they weren't trading at a $400 billion market cap. I think a lot of people assume that because they're amazon that they'll crack the last mile delivery problem, a problem that FedEx and ups, two exceedingly smart and successful and well run companies have not, not to mention the usps. FedEx and UPS want no part of last mile delivery because there's no money in it. The money is in flying it across the country with 300,000 other parcels. I'm very skeptical that Amazon can warehouse and deliver goods to your door with a significant margin, and a significant profit margin is what will eventually be required to justify a $400 billion valuation. To date, this has not been the case, and the fact is that while they've made shopping an amazingly easy process, they haven't made a lot of money doing so, certainly not compared to the few other companies trading at similar valuations. I'm not predicting a doomsday scenario in that amazon is going to go belly up. I just think the stock is headed for a dive.
- thinkling 10y ago
  Not having net profits does not mean that parts of your business are not profitable. You may want to take a closer look at Amazon's financials and see what kind of free cash flow they're generating before they reinvest that cash in expansion and new businesses. Net operating cash flow for 2016 was $16B and the trend is strongly upwards. https://secure.marketwatch.com/investing/stock/AMZN/financials/cash-flow https://secure.marketwatch.com/investing/stock/AMZN/financia...
  - dkrich 10y ago
    Right, but free cash flow is one of the most common areas of a balance sheet to use deceptive accounting to show huge numbers. Amazon is notorious for this, actually, particularly with their widespread use of capital leases. A big reason that that number has jumped so much is because of their increased investment in AWS hardware which they lease instead of purchasing.
    - thinkling 10y ago
      Why is leasing equipment considered deceptive rather than a cost-cutting measure?

dkrich 10y ago

The difference to me is the valuation- during previous downturns they weren't trading at a $400 billion market cap. I think a lot of people assume that because they're amazon that they'll crack the last mile delivery problem, a problem that FedEx and ups, two exceedingly smart and successful and well run companies have not, not to mention the usps. FedEx and UPS want no part of last mile delivery because there's no money in it. The money is in flying it across the country with 300,000 other parcels. I'm very skeptical that Amazon can warehouse and deliver goods to your door with a significant margin, and a significant profit margin is what will eventually be required to justify a $400 billion valuation. To date, this has not been the case, and the fact is that while they've made shopping an amazingly easy process, they haven't made a lot of money doing so, certainly not compared to the few other companies trading at similar valuations. I'm not predicting a doomsday scenario in that amazon is going to go belly up. I just think the stock is headed for a dive.

thinkling 10y ago
Not having net profits does not mean that parts of your business are not profitable. You may want to take a closer look at Amazon's financials and see what kind of free cash flow they're generating before they reinvest that cash in expansion and new businesses. Net operating cash flow for 2016 was $16B and the trend is strongly upwards. https://secure.marketwatch.com/investing/stock/AMZN/financials/cash-flow https://secure.marketwatch.com/investing/stock/AMZN/financia...
- dkrich 10y ago
  Right, but free cash flow is one of the most common areas of a balance sheet to use deceptive accounting to show huge numbers. Amazon is notorious for this, actually, particularly with their widespread use of capital leases. A big reason that that number has jumped so much is because of their increased investment in AWS hardware which they lease instead of purchasing.
  - thinkling 10y ago
    Why is leasing equipment considered deceptive rather than a cost-cutting measure?