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A lot more expenses for Amazon on their very low margin grocery (retail) business. People are panic-buying AMZN stock expecting this to reflect in a higher prof

by vizzah 7y ago

A lot more expenses for Amazon on their very low margin grocery (retail) business. People are panic-buying AMZN stock expecting this to reflect in a higher profits, which is very questionable. If Prime subscribers can't get their same/next day deliveries, Amazon might not get enough new subs, but could rather start losing them.

koboll 7y ago
> People are panic-buying AMZN stock expecting this to reflect in a higher profits, which is very questionable. Are we sure of that? I'd expect the rationale to look something more like "Amazon will grab a higher market share as a result of people switching to delivery during this crisis, which will result in higher profits down the road".
- matwood 7y ago
  Exactly. People are learning to use Amazon for things they may have not used it before. And it's not just Amazon. HN users are by and large very technical and early adopters of tech services. The pandemic has forced the general person to learn how to use/try out these services.
- paxys 7y ago
  The key is if people will continue to use Amazon after things have settled or just go back to their local stores.
par 7y ago
Not sure I agree with this thesis. I think after this, people will see Amazon in a new light. More like a railroad (of days past) or electric/cable company. A utility. People have very few places to turn to during this crisis, and Amazon happens to be there.
- icelancer 7y ago
  >> More like a railroad (of darks past) or electric/cable company. A utility. If people take this literally then there will be strong push to nationalize it or break it up. I'm not sure Amazon wants that feeling...
AznHisoka 7y ago
That's one way to look at it. The other way is that Amazon is growing their mindshare even more, pulling in more long term customers of Amazon Prime, Prime Video, and Fresh. Not to mention Twitch and Audible, which should be growing as well. Plus, they own AWS which is the majority of their profits. The huge surge of usage this Q might even be enough to offset any additional expenses. If there's a dip because Amazon misses earnings, long-term investors will surely buy it because of Amazon is simply growing market share, and one of the few companies that will come out of this stronger.
- nostromo 7y ago
  Amazon is a retailer, and retailers get hurt in recessions. Yes, there's a wave of panic buying currently, but that will recede. AWS may also surge with remote work, but enterprise budgets will be slashed in a recession. And a non-trivial amount of AWS's customers may fold completely.
  - AznHisoka 7y ago
    It's true that retailers get hurt in a recession. That's a headwind. The tailwind is that even more people will be shopping online via Amazon going forward. I'm betting it'll be the brick and mortars hurting more. Some of their market share will be cut due to a recession, but some of it will be going to Amazon. AWS spend will go down in a recession too, but there are numerous other companies I'll bet against before AWS (ie martech, advertising, HR tech, etc). Infrastructure is one of the most critical parts of a company.
  - rajnathani 7y ago
    Even if many of AWS’s customers fold, the big ones are likely to file for bankruptcy and thus their backend systems will still likely be operational for sometime. Example: If an airline company were to file for bankruptcy, then their booking management system (the part not likely handled by Amadeus) would still be operational. Their transactional systems (databases and associated infrastructure) would likely still be kept running, however their analytical workloads may see some trimming.
  - 6y ago
natalyarostova 7y ago
“Panic buying AMZN” is my new favorite quote to highlight how financially nonsensical HN can be.
- deleted 7y ago
  [deleted]

by vizzah 7y ago

koboll 7y ago

> People are panic-buying AMZN stock expecting this to reflect in a higher profits, which is very questionable. Are we sure of that? I'd expect the rationale to look something more like "Amazon will grab a higher market share as a result of people switching to delivery during this crisis, which will result in higher profits down the road".

matwood 7y ago
Exactly. People are learning to use Amazon for things they may have not used it before. And it's not just Amazon. HN users are by and large very technical and early adopters of tech services. The pandemic has forced the general person to learn how to use/try out these services.
paxys 7y ago
The key is if people will continue to use Amazon after things have settled or just go back to their local stores.

par 7y ago

Not sure I agree with this thesis. I think after this, people will see Amazon in a new light. More like a railroad (of days past) or electric/cable company. A utility. People have very few places to turn to during this crisis, and Amazon happens to be there.

icelancer 7y ago
>> More like a railroad (of darks past) or electric/cable company. A utility. If people take this literally then there will be strong push to nationalize it or break it up. I'm not sure Amazon wants that feeling...

AznHisoka 7y ago

That's one way to look at it. The other way is that Amazon is growing their mindshare even more, pulling in more long term customers of Amazon Prime, Prime Video, and Fresh. Not to mention Twitch and Audible, which should be growing as well. Plus, they own AWS which is the majority of their profits. The huge surge of usage this Q might even be enough to offset any additional expenses. If there's a dip because Amazon misses earnings, long-term investors will surely buy it because of Amazon is simply growing market share, and one of the few companies that will come out of this stronger.

nostromo 7y ago
Amazon is a retailer, and retailers get hurt in recessions. Yes, there's a wave of panic buying currently, but that will recede. AWS may also surge with remote work, but enterprise budgets will be slashed in a recession. And a non-trivial amount of AWS's customers may fold completely.
- AznHisoka 7y ago
  It's true that retailers get hurt in a recession. That's a headwind. The tailwind is that even more people will be shopping online via Amazon going forward. I'm betting it'll be the brick and mortars hurting more. Some of their market share will be cut due to a recession, but some of it will be going to Amazon. AWS spend will go down in a recession too, but there are numerous other companies I'll bet against before AWS (ie martech, advertising, HR tech, etc). Infrastructure is one of the most critical parts of a company.
- rajnathani 7y ago
  Even if many of AWS’s customers fold, the big ones are likely to file for bankruptcy and thus their backend systems will still likely be operational for sometime. Example: If an airline company were to file for bankruptcy, then their booking management system (the part not likely handled by Amadeus) would still be operational. Their transactional systems (databases and associated infrastructure) would likely still be kept running, however their analytical workloads may see some trimming.
- 6y ago

natalyarostova 7y ago

“Panic buying AMZN” is my new favorite quote to highlight how financially nonsensical HN can be.

deleted 7y ago
[deleted]