What is Amazons fair value?
Amazon is down 39.72% over the last year, currently valued at $92.16. My basic question is: why? And what is their actual fair valuation?

I have read that somewhere in the mid-$130s is probably a safe bet, so why does the market not seem to think so?

I dealt a lot with AWS at my work, and holy hell I want every piece of that cloud growth.

I also have a friend who works in pharmacy and they said Amazon is expanding on that front as well.

What am I missing??? Or is the golden ticket to the moon.

What is Amazons fair value? Amazon is down 39.72% over the last year, currently valued at $92.16. My basic question is: why? And what is their actual fair valuation?  I have read that somewhere in the mid-$130s is probably a safe bet, so why does the market not seem to think so?  I dealt a lot with AWS at my work, and holy hell I want every piece of that cloud growth.  I also have a friend who works in pharmacy and they said Amazon is expanding on that front as well.  What am I missing??? Or is the golden ticket to the moon.

Bobby

Look at the share price of google compared to Amazon. It’s almost the same but P/E says google makes close to $5 per share at this price while Amazon makes around $1 at this price.

Between the 2 I’m just sticking to google

Look at the share price of google compared to Amazon. It’s almost the same but P/E says google makes close to $5 per share at this price while Amazon makes around $1 at this price.  Between the 2 I’m just sticking to google

Todd Smith

It’s hard to properly evaluate Amazon, it isn’t so straight forward compared to other big stocks.  thanks all 😅

An almost 1T company is Guidong for profits between 0-4B for their next quarter on top of the FCF bleed in the past two years
Before you use the same excuse everyone does "they're reinvesting into their business", AWS is definitely slowing down and having margins be crushed. Retail is uncertain whether it'll ever be profitable. If it ever is, unlikely to have margins higher than 4 or 5 points. So yes, there's a lot of glaring issues.

An almost 1T company is Guidong for profits between 0-4B for their next quarter on top of the FCF bleed in the past two years Before you use the same excuse everyone does "they're reinvesting into their business", AWS is definitely slowing down and having margins be crushed. Retail is uncertain whether it'll ever be profitable. If it ever is, unlikely to have margins higher than 4 or 5 points. So yes, there's a lot of glaring issues.

Nate

People overestimate Amazon. This isn't the same Amazon from five years ago when they looked like they were on the verge of total domination.
1. They have their hands on too many projects. Good/bad thing. Good if you can scale it. Bad if it's taking forever and you're losing money in the hopes of it one day reaching the market.
2. People have been talking about Amazon's R&D eventually coming to fruition for years now. Sorry, but some of their shit have been absolute failures. Drone delivery, how's that going? They tried to get into video game development and failed miserably with a long-term project losing money and not having enough players. I can't remember the other projects they had that ultimately were scrapped but there are many of them.
3. E-commerce is highly competitive and low margins. That's why Amazon has had trouble with it lately. Walmart and other retailers have become very competitive in improving shipping times, prices, and item availability. I used to make Amazon orders like twice a week. I'm barely even touching my Amazon account these days. If I didn't have it for free, I would never pay. Increased labor costs, increased transportation costs, supply constraints... all have reduced Amazon's margins.
4. AWS is a positive but cloud is highly competitive with large players willing to spend billions to compete here and growth has slowed. I think AWS is like 15% of Amazon's revenue but represented 75% of their profit. That is more negative than positive. It's unlike Apple where services is high margins but at the heart of the company, their hardware is still insanely profitable. Again, e-commerce is tough business and Amazon is finding that out now. It's too late for them to ditch it so can they find a way to be more profitable with huge retailers capable of giving them a battle?
5. Internationally, they haven't had too much success. Difficult to replicate in foreign countries because the logistics is far more challenging when you're competing against domestic companies.

Positives, services revenue is bigger than sales revenue so higher margins and less dependability on their e-commerce. Operating margins have been increasing after a terrible two years so that's a good sign. Ad services have been huge for Amazon. They should really take advantage of that. Huge growth and they have the means to scale. Large consumer base, easy target.

Big issue is: Too much money being used up on projects that haven't really made any money and investors want results now. Especially when cash is hard to come by because of the rates, you can't be burning cash flow on projects that may or may not work. That's why Apple is still the cream of the crop. They are printing money whether anyone likes it or not.

People overestimate Amazon. This isn't the same Amazon from five years ago when they looked like they were on the verge of total domination. 1. They have their hands on too many projects. Good/bad thing. Good if you can scale it. Bad if it's taking forever and you're losing money in the hopes of it one day reaching the market. 2. People have been talking about Amazon's R&D eventually coming to fruition for years now. Sorry, but some of their shit have been absolute failures. Drone delivery, how's that going? They tried to get into video game development and failed miserably with a long-term project losing money and not having enough players. I can't remember the other projects they had that ultimately were scrapped but there are many of them. 3. E-commerce is highly competitive and low margins. That's why Amazon has had trouble with it lately. Walmart and other retailers have become very competitive in improving shipping times, prices, and item availability. I used to make Amazon orders like twice a week. I'm barely even touching my Amazon account these days. If I didn't have it for free, I would never pay. Increased labor costs, increased transportation costs, supply constraints... all have reduced Amazon's margins. 4. AWS is a positive but cloud is highly competitive with large players willing to spend billions to compete here and growth has slowed. I think AWS is like 15% of Amazon's revenue but represented 75% of their profit. That is more negative than positive. It's unlike Apple where services is high margins but at the heart of the company, their hardware is still insanely profitable. Again, e-commerce is tough business and Amazon is finding that out now. It's too late for them to ditch it so can they find a way to be more profitable with huge retailers capable of giving them a battle? 5. Internationally, they haven't had too much success. Difficult to replicate in foreign countries because the logistics is far more challenging when you're competing against domestic companies.  Positives, services revenue is bigger than sales revenue so higher margins and less dependability on their e-commerce. Operating margins have been increasing after a terrible two years so that's a good sign. Ad services have been huge for Amazon. They should really take advantage of that. Huge growth and they have the means to scale. Large consumer base, easy target.  Big issue is: Too much money being used up on projects that haven't really made any money and investors want results now. Especially when cash is hard to come by because of the rates, you can't be burning cash flow on projects that may or may not work. That's why Apple is still the cream of the crop. They are printing money whether anyone likes it or not.

Sam Mendoza

The stock price is reflecting future earning estimates. The problem is the future looks really cloudy for a while. It's also hard to classify. Is it a tech stock or retail stock? How does such a big company grow at the same rate they did in the past? Cloud is just part of their business, unfortunately.

Really multiple reasons for prices to not be corrected to their intrinsic value. Increased Risk Averssion, even if you know intrinsic value is high there’s a reluctance to go into a stock because of high perceived risk even if there may be none. 

Especially true right now, when there is a crisis which causes assets like housing, automobile and financial assets to drop below the price bought. People may be terrified or simply just need the cash so they liquidate bringing prices down even more.

More lucrative opportunity costs, 10Y T Bond yields right now are looking really good, great yield and relatively low risk(Maturity Risk Premium). More flight to safety towards perceived safe securities.
I’ve actually done a DCF for AMZN so my answer may be skewed towards believing in AMZN’s recovery.

The stock price is reflecting future earning estimates. The problem is the future looks really cloudy for a while. It's also hard to classify. Is it a tech stock or retail stock? How does such a big company grow at the same rate they did in the past? Cloud is just part of their business, unfortunately.  Really multiple reasons for prices to not be corrected to their intrinsic value. Increased Risk Averssion, even if you know intrinsic value is high there’s a reluctance to go into a stock because of high perceived risk even if there may be none.   Especially true right now, when there is a crisis which causes assets like housing, automobile and financial assets to drop below the price bought. People may be terrified or simply just need the cash so they liquidate bringing prices down even more.  More lucrative opportunity costs, 10Y T Bond yields right now are looking really good, great yield and relatively low risk(Maturity Risk Premium). More flight to safety towards perceived safe securities. I’ve actually done a DCF for AMZN so my answer may be skewed towards believing in AMZN’s recovery.

Bobby

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