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Amazon.com Announces Third Quarter Sales Up 34% to $43.7B

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Re: Amazon.com Announces Third Quarter Sales Up 34% to $43.7B

#81

Post by smokey_the_bear »

jedberg wrote: post #25
lettergram wrote: post #20

Earlier quoted context omitted.

Gratz! lol My wife and I just added our own registry there...

Protip. Put expensive stuff you want for yourself on the registry. It's unlikely that anyone will buy it (but hey if they do great!) but after the due date they send you a coupon for 20% off if you buy everything left on your registry. We got a bunch of lego sets for the older kid that way, and the discount counted!

SubProTip, you can get a 15% registry completion discount every 8 months, just change the due date for your baby. And you don't have to buy everything in the registry, it applies to whatever subset.

Re: Amazon.com Announces Third Quarter Sales Up 34% to $43.7B

#82

Post by alehul »

samfisher83 wrote: post #59
alehul wrote: post #15

Earlier quoted context omitted.

Correct me if I'm wrong, but isn't that just due to their accounting preferences? Amazon has had the capability of making profit for years, but prefers to expense everything off in an effort to grow rather than pay increased taxes. Their skyrocketing market cap hasn't been due to a change in the company's direction so much as investors gradually realizing this strategy and the raw growth potential of where Amazon has…

You can't just expense stuff like that. For example you buy a warehouse you can't depreciate it all in one year. Retail is a competitive low margin business. Amazon has always had crazy P/E ratio. I could never really understand it. Maybe I could understand aws, but I can't understand the valuation of the core amazon business. Suppose amazon grows to the size of walmart. Walmart is only worth 260B, and they generate…

Also, as a separate comment, I understand the crazy appearance of Amazon's valuation but I think it's one of the most justified giants in terms of market cap.

They're positioning themselves as a monopsony for the modern world, even expanding into groceries and now, evidently, pharmacies.

Imagine one company serving as an access point for so many of our goods, while wielding dubious control behind the scenes to extract profit and move vertically through the supply chain. It's easy to imagine a future where we simply buy the cheapest, reliable goods whenever in need, and end up with Amazon lightbulbs that power our Amazon TV stick, etc, etc, etc. It's scary to just see how many cities are bending over backwards to try to be the location of Amazon's HQ2.

Their move with the Echo has gained them another critical access point in the future: smart homes. In the same way we require mobile phones for our apps, we'll require a hub for our IoT devices, preferably voice-activated, and that will be the Echo.

It's hard to even sum up all of their advantages, but as someone who has competed with them in one industry before: it's a damn nightmare.

Re: Amazon.com Announces Third Quarter Sales Up 34% to $43.7B

#83

Post by sangnoir »

s17n wrote: post #34
tdb7893 wrote: post #11

Earlier quoted context omitted.

Hopefully with Microsoft and Google getting in the game we'll get some competition and that margin will reduce

Question is whether those companies will culturally be able to compete in a low-margin space. I don't know anything about Microsoft but wrt Google I've often thought that the insane margins on the search ads business have made it institutionally difficult for the company to take any low-margin business seriously. Amazon on the other hand has been all about razor thin margins since day one.

> Question is whether those companies will culturally be able to compete in a low-margin space.

25% is a fat margin: why would you say this is a low-margin space?

Re: Amazon.com Announces Third Quarter Sales Up 34% to $43.7B

#84

Post by whipoodle »

austenallred wrote: post #2

Wow. How is that even possible? Growing by a third in one year at that scale is completely mind boggling to me.

I agree it’s impressive. I’ve been using them as little as possible after a string of delivery mishaps and generally poor service.

It’s kind of awful to use these days, in my opinion. But they’re obviously doing something right.

Re: Amazon.com Announces Third Quarter Sales Up 34% to $43.7B

#86

Post by kgwgk »

alehul wrote: post #79
kgwgk wrote: post #54

Earlier quoted context omitted.

Good luck getting the IRS to accept that "good" accounting choice. In fact the reported statements can be different from those used to calculate the actual taxes paid. But even if the SEC is more flexible, there are still limits on what can be done. They are still reporting capex much higher than net income, if they expensed everything off they would be reporting billions in losses every quarter.

You're right that Amazon has higher capex than income, however this has been intentional; I haven't been in finance for a while, and apparently this is how they're doing it now, but the main point holds true of purposely avoiding income. From an a16z partner: > So, though we can’t be sure, it looks like the capex is not going up because Amazon’s existing business has become more expensive to run, but because Amazon i…

In case it's not clear, capex doesn't avoid income (at least not now). Capex is paid for with (after tax) profits, debt or new capital. Of course depreciation will reduce profits in the future, maybe you mean that.

There is a bit of flexibility in when things are expensed, but there are rules. You cannot buy a building and expense it today. On the other hand, you can spend a lot in marketing or some forms of R&D and you have to expense them now (they cannot be capitalised, even though in fact the return on the investment will come in the future).

Re: Amazon.com Announces Third Quarter Sales Up 34% to $43.7B

#87

Post by wahern »

samfisher83 wrote: post #59
alehul wrote: post #15

Earlier quoted context omitted.

Correct me if I'm wrong, but isn't that just due to their accounting preferences? Amazon has had the capability of making profit for years, but prefers to expense everything off in an effort to grow rather than pay increased taxes. Their skyrocketing market cap hasn't been due to a change in the company's direction so much as investors gradually realizing this strategy and the raw growth potential of where Amazon has…

You can't just expense stuff like that. For example you buy a warehouse you can't depreciate it all in one year. Retail is a competitive low margin business. Amazon has always had crazy P/E ratio. I could never really understand it. Maybe I could understand aws, but I can't understand the valuation of the core amazon business. Suppose amazon grows to the size of walmart. Walmart is only worth 260B, and they generate…

Company A grows revenues at %5 per annum. Company B grows revenues at %4.9 per annum. In both cases the trend is equally likely to continue in perpetuity. And neither company is expected to ever pay dividends.

Which stock are people going to buy? _Everybody_ is going to buy Company A's stock and _nobody_ is going to buy Company B's stock. P/E doesn't matter because 1) no dividends and 2) it's not a proxy for relative risk (we established risk is identical between the two).

Amazon is special because it's potential for revenue growth is believed to be nearly unlimited. As long as they're not losing money, and as long as they have enough profits to continue growing revenue, people will keep investing. Once the specter of stagnant revenue growth appears, Amazon's stock will probably come crashing down.

Basically, investors chase revenue growth, not profits. Berkshire Hathaway works the same way. Buffet might be a value investor who buys companies that can grow profits, but the price of BRK.A tracks the revenue growth of the holding company, not its profits.

Conversely, Wal-Mart's revenue growth has completely stalled. In fact, the stock price plummeted the year that revenue decreased slightly.

This is how things look as far as I can tell. I'm not a financial professional, and even if I'm right I'm sure there's a far better way (more technical, more comprehensive) to explain this dynamic.

Re: Amazon.com Announces Third Quarter Sales Up 34% to $43.7B

#88

Post by [deleted] »

homero wrote: post #69
adventured wrote: post #53

Earlier quoted context omitted.

Walmart's online business is booming and its offline retail business is still four times the size of Amazon's retail business. Walmart's online retail business is about 30% the size of Amazon's and growing twice as fast. Walmart apparently isn't going quietly. "The discount chain reported on Thursday that U.S. online sales rose a staggering 63% in the first fiscal quarter of the year, following last year’s overhaul o…

Might include Jet

[deleted]

Re: Amazon.com Announces Third Quarter Sales Up 34% to $43.7B

#89

Post by mrb »

vidarh wrote: post #70
jedberg wrote: post #17

That was me and my wife. I'm pretty sure our baby stuff accounts for most of that growth.

Do you know Amazons order page lets you see how many orders you place each year? It is quite telling: 2007, 2008, 2009 were 2016: 270... It's all about establishing the habits.

They also have a page to generate CSV reports on your purchases. I noticed the wife and I spent well over $10k in last 12 months. Up 2× or 3× since last year!

Re: Amazon.com Announces Third Quarter Sales Up 34% to $43.7B

#90

Post by hobofan »

whoisjuan wrote: post #55
hobofan wrote: post #40

Earlier quoted context omitted.

Out of all the big ones Amazon is the one I'd want the least to make much money. They just seem to have the least human view of their customers, with some products they've built completely centered around viewing their customers as consumer-machines.

Compared to Apple that artificially created a consumption cycle of one 700 USD (Now 1000 USD) device per year?

Yes, _one_ device, and with the rather long support of their devices, you definitely don't have to buy it yearly (I get your point, tough).

Every product Amazon presents, is in a very obvious way geared towards making people consume more every day as if that were the biggest joy people have in their life. Ordering from Amazon via image recognition was one of the only unique features, the Fire Phone had. Why would I as a person deciding between smartphones want that? Alexa was presented in the same way, and then there obviously is the Dash button.

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