Can You Believe What Amazon's Stock Just Did?!

TL;DR

Amazon's stock is large, but its financials and profit margins raise concerns about its future valuation.

Transcript

like everybody's like oh it's huge I'm like it's still not huge it's ginormous my wife left me I had no my children disowned me it was terrible that's stupid that just seems aggressive is it possible all right so what's the company worth Amazon stock this is the one I got wrong so many years ago I shorted it it went nowhere but straight up I got ki... Read More

Key Insights

• 🤨 Amazon's revenue is impressive, but its profitability raises concerns about its future value.
• 💐 The company's profit margins and free cash flow are relatively low compared to its size.
• ❓ Analyst projections for Amazon's profitability may be overly optimistic.
• 💄 Understanding all the divisions and sources of income for Amazon is complex, making it a challenging investment to evaluate.
• ⚾ Amazon's stock price may be overvalued based on current financials and projections.
• 😨 Investor sentiment and FOMO (Fear Of Missing Out) should not drive investment decisions.
• 😘 Waiting for a lower stock price, potentially around $60, may be a more reasonable entry point for Amazon.

Questions & Answers

Q: Why does Amazon's stock valuation raise concerns?

While Amazon has a huge revenue, its low profit margins and free cash flow suggest that its current valuation may be too high.

Q: How does Amazon's investment in Rivian affect its financials?

There are differing opinions about the impact of Rivian on Amazon's financials, with some suggesting that the markdown of Rivian shares may be responsible for the company's negative net income.

Q: What are analysts predicting for Amazon's future profitability?

Analysts are projecting a significant increase in Amazon's profit per share, with estimates ranging from $1.72 to $19.48. However, these projections may be optimistic given the company's historical profit margins.

Q: What are the key challenges for Amazon's future success?

Amazon needs to address its low profit margins and find ways to increase its net income. Additionally, the company will need to sustain its growth in revenue and navigate potential challenges in its cloud computing division.

Summary & Key Takeaways

• Amazon has a massive $514 billion revenue, but its net income and profit margins are relatively low.

• The company's five-year profit margin is only 4% and its gross margin is 13.2%.

• Amazon's average free cash flow is $6.6 billion, which is relatively low for a trillion-dollar company.