Amazon (AMZN) Stock Analysis - Intrinsic Value: $4,470/share, Undervalued!

TL;DR

Amazon's stock is undervalued, with an estimated intrinsic value of $4,470/share, and its long-term growth prospects are driven by its dominant e-commerce business, Amazon Web Services (AWS), and growing number of Prime members.

Transcript

Hello everyone, this is Victor here.  Welcome to the Intelligent Investor Channel   where you will learn about stock  investing analysis and personal finance   that will help you become a great investor. Recently, Amazon announced that Jeff Bezos,   its CEO and Founder, will move to  the executive chairman position,   and Andy Jassy, the head of Am... Read More

Key Insights

• 💄 Amazon's stock is undervalued with an estimated intrinsic value of $4,470/share, making it a potential investment opportunity.
• 🌎 The e-commerce market dominance, accelerated by the pandemic, positions Amazon for continued growth in both North America and international markets.
• 💪 AWS remains Amazon's most profitable business, with a significant market share and strong customer growth.
• 🪛 The increasing number of Prime members adds to Amazon's economic moat and drives customer loyalty.
• 👨‍💼 Competition, particularly in the e-commerce business, remains a risk for Amazon's continued dominance.
• ❓ The impact of increasing US treasury yields poses a threat to the stock's performance.
• 💪 Despite the risks, the long-term growth prospects for Amazon remain strong, making it an attractive investment option.

Questions & Answers

Q: How has the pandemic affected Amazon's stock performance?

The pandemic accelerated e-commerce sales, benefiting Amazon's stock with a 443.05% increase in the past 5 years.

Q: What assumptions were made in the DCF model to estimate Amazon's intrinsic value?

The model assumed the use of operating cash flow, projected growth rates of 15-35% for the next 5 years, and a price-to-cash flow multiple of 15.97 for the terminal value.

Q: What are the three long-term growth catalysts for Amazon?

Amazon's growth is driven by its dominant e-commerce business, the profitability of AWS, and the increasing number of Prime members.

Q: What are the risks for Amazon's stock?

Risks include the impact of increasing US treasury yields on all stocks, including Amazon, and the competition it faces in both the e-commerce and cloud business sectors.

Summary & Key Takeaways

• Amazon's stock has performed exceptionally well in the past 5 years, benefiting from increased e-commerce sales during the pandemic.

• The analysis uses a modified discounted cash flow (DCF) model to estimate Amazon's intrinsic value, based on assumptions about operating cash flow growth and a price-to-cash flow multiple.

• Amazon's long-term growth catalysts include its dominance in the e-commerce market, the profitability of AWS, and the growing number of Prime members.