Barron's is out with support for AMZN this weeked: says 3rd Party sales is the key driver in the future
At least to me, the improvement in gross margins this quarter was the key indicator that Bezos might pull off his master plan. That has not be ignored by the Street, this weeks price action was all about options and the put premiums were huge. This coming week should tell the real tale. With all the bearishness on this board, coupled with the fact that many higher flying momo oriented stocks were flat yesterday too, this week should see a nice bounce - if on volume it will be a move up - if for no other reason than to kill all the put premium . . .
"At least to me, the improvemenit in gross margins this quarter was the key indicator that Bezos might pull off his master plan"
that or WS has to move to the "gross margin" story as sale increases slow down so that story looks more flimsey. The gross margin story coveniently leaves out the more thatn offsetting fufullment expense increase: which could be a smorgasboard of stuff the might be clasified as "cost of goods sold" in their 3rd party business. More of an accounting of where expenses are placed then anyting else so far: as it allows the hype of the gross margin story. Bottom line: AMZN hasn't achieved the botttom line results that were expected off a couple years ago off the $2.52 peak base of earnings. Whether Bezos is pulling off a vision or WS is merely trying to keep the AMZN bull story intact, time will tell. Tapping the bond market shows they had troulbe funding themselves from internal operations. Option strikes, positions be damned.
"...as sale increases slow down ..." This statement has been made, and seized upon by Amazon bears. It's nonsense. For the past 10 years, yoy revenue increases have been
36%, 30%, 23%, 26%, 38%, 30%, 28%, 40%, 41%, 27%
The combined increase for these 10 years is about 1600%. The truly amazing thing is that in spite of growing so fast, Amazon has managed to have the highest customer satisfaction of all internet retailers for years, and still made a small profit while building the most encompassing and efficient distribtion system the planet has ever imagined. This is Bezos' plan. For a hobby, he's building a 10,000 year clock and a spaceship. Amazon is what he really cares about. You think you can figure out why he can't succeed? Good luck with that one. Before you tell me how stupid I am, let me remind you I doubled my money in AMZN in 2012, how'd you do?
Precisely. I pointed out earlier that the metric Amazon believes is most important grew only 7% TTM and has grown far more slowly than revenues since 2009. The reason has to do with fundamentaleconomics of the business model. The analysts mistake coorelation for causation when looking at gross margin... they should be looking at the declining net profit per item sold and asking why...
Hang in there shorts. Let those that would seek to perpetuate the (close to Enron scale) scam hold all the risk...