Should you buy Amazon stock? May 2023
- 6 months ago
Amazon stock analysis. AMZN stock.
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Revenue from online stores was roughly flat at 51 billion. Physical stores increased 7% to 4.9 billion. 3rd party services increased 18% to 30 billion. Subscription revenue increased 15% to 9.7 billion, advertising increased 21% to 9.5 billion. AWS increased 16% to 21 billion and other bets increased 55% to 1 billion.
But despite this growth, the stock has fallen roughly 4% and there’s an obvious reason why.
Although AWS is showing year on year growth this was the first time that revenue has dropped against the previous quarter. And AWS operating margin has now fallen from 31% in 2022 to 26% resulting in a quarterly decline in operating income.
This is causing investors some concern. AWS is seen as the jewel in Amazon’s crown so a slowdown causes a lot of damage to the Amazon bull case.
Looking at the bigger picture, the company is now valued at just over 1 trillion dollars. Trailing twelve month revenue sits at 525 billion, net income is 4.2 billion and adjusted ebitda is 57 billion. So the stock is valued at roughly 2 times revenue, 249 times earnings or 18 times ebitda.
Combine the slowdown in AWS and the negative free cash flow and investors are becoming worried about the stock’s valuation.
However, Amazon remains a unique company and management’s ability to keep reinvesting profits for growth continues to impress.
After all, this remains a difficult economic environment to operate in. Meta grew revenues only 3% this quarter and Alphabet grew less than that.
AWS, advertising and 3rd party services continue to look like great businesses. And AWS will get a tailwind from the explosion in artificial intelligence. As Andy Jassy said on the conference call:
Few folks appreciate how much new cloud business will happen over the next several years from the pending deluge of machine learning that’s coming.
And I think the explosion of AI startups and AI apps bears this out.
#amznstock #stocks #investing #stockstobuy
Visit our website for more https://www.overlookedalpha.com
Revenue from online stores was roughly flat at 51 billion. Physical stores increased 7% to 4.9 billion. 3rd party services increased 18% to 30 billion. Subscription revenue increased 15% to 9.7 billion, advertising increased 21% to 9.5 billion. AWS increased 16% to 21 billion and other bets increased 55% to 1 billion.
But despite this growth, the stock has fallen roughly 4% and there’s an obvious reason why.
Although AWS is showing year on year growth this was the first time that revenue has dropped against the previous quarter. And AWS operating margin has now fallen from 31% in 2022 to 26% resulting in a quarterly decline in operating income.
This is causing investors some concern. AWS is seen as the jewel in Amazon’s crown so a slowdown causes a lot of damage to the Amazon bull case.
Looking at the bigger picture, the company is now valued at just over 1 trillion dollars. Trailing twelve month revenue sits at 525 billion, net income is 4.2 billion and adjusted ebitda is 57 billion. So the stock is valued at roughly 2 times revenue, 249 times earnings or 18 times ebitda.
Combine the slowdown in AWS and the negative free cash flow and investors are becoming worried about the stock’s valuation.
However, Amazon remains a unique company and management’s ability to keep reinvesting profits for growth continues to impress.
After all, this remains a difficult economic environment to operate in. Meta grew revenues only 3% this quarter and Alphabet grew less than that.
AWS, advertising and 3rd party services continue to look like great businesses. And AWS will get a tailwind from the explosion in artificial intelligence. As Andy Jassy said on the conference call:
Few folks appreciate how much new cloud business will happen over the next several years from the pending deluge of machine learning that’s coming.
And I think the explosion of AI startups and AI apps bears this out.
#amznstock #stocks #investing #stockstobuy