Amazon $AMZN research Mega Thread ๐งต๐
This will be updated as we read more about their business. RT if you discovered something new.
This will be updated as we read more about their business. RT if you discovered something new.
1/ Start with reading our notes of their 2020 letter to shareholders: Jeff Bezos's last one.
A must-read to understand the culture of Amazon & why did it create a 38% cagr since their IPO.
A must-read to understand the culture of Amazon & why did it create a 38% cagr since their IPO.
2.1/ Starting with Q4 2021 concall:
The cloud business, AWS (Amazon Web Services) added more revenue year over year than any quarter in its history. It is now a $71B annualized run rate biz, up from a $51B run rate YoY.
Growing at 40% & accelerating.
The cloud business, AWS (Amazon Web Services) added more revenue year over year than any quarter in its history. It is now a $71B annualized run rate biz, up from a $51B run rate YoY.
Growing at 40% & accelerating.
2.2/ "Meta, the parent company of Facebook, Instagram, and WhatsApp, selected AWS as its long-term strategic cloud provider to accelerate artificial intelligence research and development."
Other customers: Adidas, Goldman Sachs, Nasdaq, Pfizer, etc.
Other customers: Adidas, Goldman Sachs, Nasdaq, Pfizer, etc.
3/ Amazon's 2yr annual rev cagr has been 25%; 1yr at 9%.
They are investing significantly to keep pace with demand
- Doubled operations capacity in the last 2yrs & the number of employees which stands at 16 lakhs now.
- Expanded their fulfillment center footprint
They are investing significantly to keep pace with demand
- Doubled operations capacity in the last 2yrs & the number of employees which stands at 16 lakhs now.
- Expanded their fulfillment center footprint
4/ Operating income for the quarter was hit massively from $6.9B in Q4 2020 to just $3.5B this quarter.
- Inflationary issues: from wage increments due to scarcity, higher supplier costs & incentives.
- Negative operating leverage due to lower vols.
- Inflationary issues: from wage increments due to scarcity, higher supplier costs & incentives.
- Negative operating leverage due to lower vols.
5/ While the majority of their net profits this quarter ($11.8B out of $14.4B) were due to the gains of Rivian (had invested in this EV venture) going public, the returns after the IPO are uninspiring: a good way to say that the stock is down 80% from highs.
6/ Prime becomes expensive for US citizens: Digital inflation
Also reading improved services that have increased the stickiness:
- Prime shopping is better than ever
- Amazon Pharmacy (How big can this become?)
- Prime reading & watching
- Prime gaming (Copying Netflix ๐)
Also reading improved services that have increased the stickiness:
- Prime shopping is better than ever
- Amazon Pharmacy (How big can this become?)
- Prime reading & watching
- Prime gaming (Copying Netflix ๐)
7/ So, Amazon is facing challenges to make their fast e-com business, which is grocery delivery in 1-2hrs & same-day delivery to be profitable after handling the volumes & the order sizes it deals with.
& We are focused on funding losses of 10 mins delivery?
& We are focused on funding losses of 10 mins delivery?
8/ On expanding the Ads business:
"Advertising only works and it's only successful if we make it a good customer experience."
will not just chase profitability for the sake of it, customer convenience trumps over it.
"Advertising only works and it's only successful if we make it a good customer experience."
will not just chase profitability for the sake of it, customer convenience trumps over it.
9/ 2021 sales grew 22% to $470B this year, however, is the growth or the ambitions slowing down? No.
Capex will continue to fund the capacity for a much higher revenue base.
A multinational E-com Goliath. We need more Davids.
Capex will continue to fund the capacity for a much higher revenue base.
A multinational E-com Goliath. We need more Davids.
10/ Rev by segment:
Online business+ 3P sellers slowing down due to high base of 2021
Subscription business has traction: will gain further as the price is increased from 2022
AWS with accelerating growth
Ads business is the dark horse.
Online business+ 3P sellers slowing down due to high base of 2021
Subscription business has traction: will gain further as the price is increased from 2022
AWS with accelerating growth
Ads business is the dark horse.
11/ 2020 AR:
Seek to Earth's most customer-centric company.
Guided by 4 principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence & Long term thinking.
What they offer different stakeholders ๐
Seek to Earth's most customer-centric company.
Guided by 4 principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence & Long term thinking.
What they offer different stakeholders ๐
12/ Another big tech with competes with almost every company on the planet.
A favorite Bezos aphorism is โYour margin is my opportunity.โ
In Omni-channel retail, cloud computing, E-commerce services, electronic devices, digital content, grocery, advertising, logistics, etc.
A favorite Bezos aphorism is โYour margin is my opportunity.โ
In Omni-channel retail, cloud computing, E-commerce services, electronic devices, digital content, grocery, advertising, logistics, etc.
13/ What every investor earns to hear: "Our financial focus is on long-term, sustainable growth in free cash cashflows."
"We seek to reduce our variable costs per unit & work to leverage our fixed costs."
Turning inventory fast= success in retail business by fit cash management
"We seek to reduce our variable costs per unit & work to leverage our fixed costs."
Turning inventory fast= success in retail business by fit cash management
14/ "There are two kinds of companies: Those that work to try to charge more and those that work to charge less. We will be the second.โ ~Bezos.
That's the moat.
That's the moat.
15/ Nothing less expected of a company spending the highest amounts in R&D ever; Q4 2021 spends at over $15B (up 27% YoY) ๐
Though it does include content investments & stock based compensation.
Though it does include content investments & stock based compensation.
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