My afterthoughts to Tiger_chat 's question of whether an investor profits from a good company or a good price ?
"Why not both" I asked myself ?
Wouldn't there be more upsides comparatively speaking ?
Having put the theory to test on (1) Meta Platform, Snap, (2) Visa & Mastercard (3) Tesla, General Motors (4) Netflix (5) AMD, Lam Research, Intel and (6) Spotify; time to try it on another FAANG stock !
Let's put to the test & see if it fits the bill.
Sidetrack: Below are stocks that I have covered.
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- United Parcel Service
- Spotify Inc
- Apple Inc
- Meta Platform (Facebook)
- AMD Inc
- Snap Inc
- Lam Research (semicon)
- General Motors
- Visa Inc
- An American multi-national technology company
- Founded on 05 Jul 1994 (28 years young company)
- Founder was Jeff Bezos
- Initially it was purely anonline marketplacefor books.
- However it grew into a multitude of product categories
- Earning it the moniker The Everything Store.
- It was listed on Nasdaq in15 May 1997at $18 per share
- In 2021, it surpassed Walmart as the world's largest retailer outside of China
- As of 2023, it is the world's largest online retailer & market place, as measured by revenue & market share.
- Its core businesses are eCommerce, subscription services, brick & mortar business, 3rd party seller services and technology services via Amazon Web Services (AWS).
In 2022, a year where US market has been hammered by extreme volatility and ease of covid pandemic restrictions - how did AMAZON fare ?
Current stock price < 08 Feb 2022 stock price by -35.95%
Amazon - Summary
- Net Sales (revenue ?) came in at $149.2 Billion vs $137.4 Billion (Q4 2021); thats a +8.59% gain.
- Net Income came in at $278 Million vs $14.32 Billion (Q4 2021); thats a -98.06% decline
- Earnings per share (diluted) was $0.03 vs $1.39 (Q4 2021); thats a -97.84% decline.
- Operating Income came in at $2.73 Billion vs $3.46 Billion (Q4 2021); thats a -21% decline
Amazon - Revenue by Quarters
- Quarter for quarter comparison, Amazon has managed to deliver on its top line.
Amazon - Revenue breakdown analysis
- As could be seen, North America still accounts for the bulk of Amazon's revenue / net sales at 62.6%. In Q4 2022, it managed to grow the business by +13%.
- This is followed by International segment that accounts for 23.1% of top line. However due to persistent pandemic restrictions worldwide (particularly in China), growth dipped by-7% to $34.4 Billion.
- Amazon's technology service - Amazon Web Services launched only in 2002 (mere 10 years ago) completes the Sales Mix at 14.3%. In Q4 2022, it managed a +20% growth.
Amazon - AWS ranking worldwide
- FYI - Amazon Web Services (AWS) is ranked #1 when it comes to Cloud computing servicing with a leading worldwide market share of 34%.
Amazon - Key Business Metrics
Amazon - AWS's sales & operating income breakdown
- Above are Amazon's 5 Key Businesses & its Q4 2022 results
- All 5 businesses have registered growth of various degrees except for AWS's Operating Income that was $5.2 Billion vs $5.3 Billion (Q4 2021); that's a -1.88% decline.
Amazon - Other Highlights
- During 2022, most companies operating expenses have ballooned in an unsustainable manner - eg. Meta (+22%), AMD (+100%), General Motors (+26%) etc..
- Amazon was no exceptions. Its operational costs have swelled by +9%.
- For a labour intensive company, this needs to be managed to prevent a galloping expenses.
Amazon 's CEO on Q4 2022 Results
We're also encouraged by the continued progress we're making in reducing our costs to serve in the oprations part of our Stores business. In the short term, we face an uncertain economy, but we remain quite optimistic about the long term opportunities for Amazon...Amazon, CEO, Andy Jassy
Is Amazon Still A Good Price and Good Company ?
- For 2022, Amazon noted a -$12.7 Billion pre-tax valuation loss due to its investment in EV company Rivian; that's still in the red.
- To keep operating expenses under control, it has also planned to layoff 18,000 staff in 2023
- On eCommerce, it will continue to focus on providing the broadest selection, exceptional value, and fast delivery of merchandise to customers; which had underpinned it Q4 top line
- Not to mention enhanced the shopping experience by partnering Snapchat to launch a 3D augmented reality shopping experience
- Amazon's latest investments & innovations in its new ventures (eg. streaming entertainment, customer-first healthcare (Amazon Clinic), broadband satellite connectivity for more communities globally), are beginning to bear fruits
- As for AWS core business, Amazon is growing at a healthy rate as customers selected to be hosted by AWS eg. Yahoo Ad Tech, Descartes Labs, Brookfield Asset Management, American Family Insurance, Duke Energy, Wallbox etc...
- As of end 2022, AWS has 96 Availability Zones within 30 Geographic regions globally, with announced plans to launch 15 more Availability Zones and five more AWS Regions all through 2023.
- Do you think 2023 will be the turning point for Amazon ?
- Do you foresee Amazon's stock price rising in tandem with market sentiments ?
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