Internet Retail
Published on September 13, 2024
STOCKSTOBUYNOW.WIKI
Amazon.com, Inc. began in 1994 as an online bookstore,Â
founded by Jeff Bezos with the vision of capitalizing on the untapped potential of the Internet.
What started as a humble e-commerce platform quickly expanded into a multi-faceted global conglomerate.
Today, Amazon dominates various industries, from e-commerce and cloud computing (through AWS) to entertainment, logistics, and artificial intelligence.
514
575
470
386
2020
2021
2022
2023
2019
280
Amazon's rapid financial growth reflects its business expansion, with revenues soaring as it tapped into new markets and global e-commerce growth.
2018
233
46.7
84.9
46.3
66.1
2020
2021
2022
2023
2019
38.5
Its operating cash flow continues to rise steadily, reflecting its vast market reach and efficiency in scaling its operations.
2018
30.7
trailingÂ
44.68
P/E:
However, for value investors, Amazon is a puzzle. Its PE ratio exceeds the typical value investor threshold of 15, making it expensive by traditional standards.
mrqÂ
8.27
P/B:
The company's price-to-book ratio also exceeds the internet retail industry average of 5.76 and the typical value investor threshold of 1.
trailingÂ
40.49
P/FCF:
And its price-to-free-cash-flow ratio is four times higher than the typical value investor acceptable threshold of 10.
These figures suggest the stock is richly valued, with investors pricing in substantial future growth and profitability.
STOCKSTOBUYNOW.WIKI
5Y:
102.32%
ALL:
152,917.44%
Amazon's capital expenditures, consistently exceeding 100% of its net income, reflect its relentless reinvestment strategy.
2020
2021
2022
2023
2019
2018
-2,142.6
158
166
164
109
112
Unlike traditional dividend-paying stocks, Amazon has never distributed dividends to its shareholders,
fueling its growth through massive investments in infrastructure, technology, and logistics.
The company only repurchased its shares once, showing that management prioritizes long-term growth over immediate returns to shareholders.
6
0
0
0
0
0
2020
2021
2022
2023
2019
2018
YOY % growth by segment:
North America
12
International
12
AWS
13
Despite its impressive top-line growth, Amazon’s profitability metrics are not as stellar.
2022
2023
13
-8
29
Its operating and net profit margins are both below 8%, relatively slim compared to its mammoth scale.
2.4
6.4
5.3
5.9
2020
2021
2022
2023
2019
5.2
2018
5.3
-0.52
5.3
7.1
5.5
4.1
4.3
Additionally, its return on assets and return on equity appear mediocre, reflecting the high costs of its extensive operations.
-1
6
8
7
5
6
-2
15
24
23
19
23
2020
2021
2022
2023
2019
2018
For a company of Amazon's size, these numbers suggest that while growth is robust, profitability and efficiency are areas for potential improvement.
STOCKSTOBUYNOW.WIKI
Growing cash reserves and rising retained earnings allow Amazon to invest in innovations, market expansion, and acquisitions.
54
73
36
42
36
32
2020
2021
2022
2023
2019
2018
83
114
86
53
31
20
Net sales of Amazon by groups of similar products and services in 2023 (%):
16%
40%
8%
24%
AWS
Online stores
Advertising services
Physical stores
Amazon's high valuation multiples show market confidence in its potential, but also raise questions about its value relative to the current price.
$132.62
$221.18
Whether Amazon can maintain its trajectory or see its valuation normalize to more traditional levels remains the key question for investors.
-29%
16%
In conclusion, Amazon blends visionary growth with limited profitability, reflecting the challenges of managing a global empire while balancing innovation, infrastructure, and efficiency.