Amazon Stock - Can this giant be stopped?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Leemiller
Posts: 1040
Joined: Sat Jun 01, 2013 12:42 pm

Re: Amazon Stock - Can this giant be stopped?

Post by Leemiller » Sat Feb 03, 2018 9:46 pm

I don’t trust Amazon for certain products, given the counterfeit and second rate goods on the site. Also, so many fake reviews! For toys, they are often more expensive than other options - especially it seems around the holidays. And I can get cash back at Walmart with two day shipping for many things.

So overall, my amazon use has decreased over the past two years. We still have prime membership, but I’m not sure I’ll keep it for much longer.

LFKB
Posts: 512
Joined: Mon Dec 24, 2012 7:06 pm

Re: Amazon Stock - Can this giant be stopped?

Post by LFKB » Sat Feb 03, 2018 9:48 pm

nisiprius wrote:
Sat Feb 03, 2018 5:08 pm
Picking 12/31/2000 by eyeball and intuition as the start of a period of time during which Amazon grew fairly steadily...

Source
Image

Since then, over a period of 17 years, Amazon has grown about 75X while the stock market as a whole has grown only 3X. That means that Amazon represents 25 times as much of the market as it used to. It currently represents about 1.7% of the stock market, or 1/59th of the market. If it continues to grow at the same rate, it will multiply its percentage of the market by another 59X in...

25X in 17 years = 25^(1/17)-1 = 20.8% per year...
...to grow 59X at 20.8% per year will take log(59)/log(1.208)...
= 21.5 years.

So, if it and the stock market continue to grow at the same rate as they grew over the last 17 years, the stock market will consist entirely, 100% of Amazon stock, and nothing else, by midyear 2038.

Remember, that isn't just 100% of retail, that's 100% of everything. No ExxonMobil, no Walt Disney, no Microsoft... just Amazon.

I've been wrong about lots of things, but I'm pretty sure that won't hapen The giant will be stopped, or slowed to the normal growth rate of a mature business, long before the end of 2038.

I remember when it was projected that Wang Laboratories would surpass IBM in just a few years... I think the projection was made by Dr. Wang himself in the mid 1990s, and Wang was projected to be bigger than IBM by the year 2000. Some readers probably don't know what Wang Laboratories was; I'll leave doing the web search as an exercise for the reader.
I don’t think anyone is trying to make the point that Amazon’s share price is going to grow and it’s historical rate. You essentially put out a hypothesis and then disproved it yourself, but no one was arguing the hypothesis to start with. The law of large numbers applies here and the stock won’t go up 75x from it’s current $600bn+ market cap. We should all be able to agree on that.

But let’s look at some simple points
1) Amazon has a clear leadership position in ecommerce, they are taking market share in that market and online sales currently only represents about 9% of retail sales. I’d expect that to go to 50% eventually (maybe 10-20 years)
2) Cloud is a huge and fast growing business and Amazon has the premier position in this area
3) Alexa and voice based shopping will likely become more popular over time. As that happens, Amazon can sell its own products to consumers, particularly for commdorized prodicts. “Alexa buy batteries” and Alexa sends you the Amazon batteries and not Energizer.
4) Their studio has had great success to date

It sets up well in my view to grow faster than the overall market as a result. I own about $70k worth of their stock today and have no plans of selling in the near term.

User avatar
willthrill81
Posts: 5396
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Amazon Stock - Can this giant be stopped?

Post by willthrill81 » Sat Feb 03, 2018 9:48 pm

Dottie57 wrote:
Sat Feb 03, 2018 9:28 pm
madbrain wrote:
Sat Feb 03, 2018 8:50 pm
Dottie57 wrote:
Sat Feb 03, 2018 1:48 pm
Revenue and growth with limited profits - what good is it to an invester?
It won't always be that way. Once they eliminate their competition, they can raise prices and profits will shoot up. That's likely when government intervention will occur.
I've been hearing about raising prices and big profits for more than a decade..../yawn
You know which retailer has more than 80% as much sales revenue as Amazon? Walgreen's. And their earnings per share are over 90% as good as Amazon's. Yet their market cap is only about 10% as much as Amazon's.

Irrational exuberance anyone? Bueller?
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Theoretical
Posts: 1400
Joined: Tue Aug 19, 2014 10:09 pm

Re: Amazon Stock - Can this giant be stopped?

Post by Theoretical » Sat Feb 03, 2018 9:55 pm

willthrill81 wrote:
Sat Feb 03, 2018 9:48 pm
Dottie57 wrote:
Sat Feb 03, 2018 9:28 pm
madbrain wrote:
Sat Feb 03, 2018 8:50 pm
Dottie57 wrote:
Sat Feb 03, 2018 1:48 pm
Revenue and growth with limited profits - what good is it to an invester?
It won't always be that way. Once they eliminate their competition, they can raise prices and profits will shoot up. That's likely when government intervention will occur.
I've been hearing about raising prices and big profits for more than a decade..../yawn
You know which retailer has more than 80% as much sales revenue as Amazon? Walgreen's. And their earnings per share are over 90% as good as Amazon's. Yet their market cap is only about 10% as much as Amazon's.

Irrational exuberance anyone? Bueller?
Whoa! I really don't know what to say.

danaht
Posts: 506
Joined: Sun Oct 18, 2015 11:28 am

Re: Amazon Stock - Can this giant be stopped?

Post by danaht » Sat Feb 03, 2018 9:57 pm

If Amazon tries to buy Target - then I think the government might try to stop that. Otherwise - it probably won't be stopped for a while.

SlowMovingInvestor
Posts: 794
Joined: Sun Sep 11, 2016 11:27 am

Re: Amazon Stock - Can this giant be stopped?

Post by SlowMovingInvestor » Sat Feb 03, 2018 9:58 pm

LFKB wrote:
Sat Feb 03, 2018 9:48 pm
It sets up well in my view to grow faster than the overall market as a result.
It's PE is about 10 times that of the market, so it needs to grow much faster than the market.

User avatar
Alexa9
Posts: 1499
Joined: Tue Aug 30, 2016 9:41 am

Re: Amazon Stock - Can this giant be stopped?

Post by Alexa9 » Sat Feb 03, 2018 10:03 pm

Amazon has great customer service and good prices for the convenience of not going to the store, although it's gotten slightly worse now that they've swallowed most of the competition.

madbrain
Posts: 5027
Joined: Thu Jun 09, 2011 5:06 pm
Location: San Jose, California

Re: Amazon Stock - Can this giant be stopped?

Post by madbrain » Sat Feb 03, 2018 10:07 pm

Dottie57 wrote:
Sat Feb 03, 2018 9:28 pm
I've been hearing about raising prices and big profits for more than a decade..../yawn
There are products that I order regularly from Amazon like nutritional supplements, and I can tell you that they have have gone up quite a bit on Amazon.com, some as much as 50% from one order to another. When that happens, I buy my refills somewhere else. I always check my order history. The dynamic pricing on Amazon can really be problematic. You don't normally have that at other merchants. So, maybe you haven't observed it personally, but I certainly have. Now, maybe those increases are not all going straight into Amazon's pocket, but they are very real.

Theoretical
Posts: 1400
Joined: Tue Aug 19, 2014 10:09 pm

Re: Amazon Stock - Can this giant be stopped?

Post by Theoretical » Sat Feb 03, 2018 10:07 pm

danaht wrote:
Sat Feb 03, 2018 9:57 pm
If Amazon tries to buy Target - then I think the government might try to stop that. Otherwise - it probably won't be stopped for a while.
I threw up a little when I read that prediction.

iamlucky13
Posts: 965
Joined: Sat Mar 04, 2017 5:28 pm
Location: Western Washington

Re: Amazon Stock - Can this giant be stopped?

Post by iamlucky13 » Sat Feb 03, 2018 10:09 pm

telemark wrote:
Sat Feb 03, 2018 8:40 pm
iamlucky13 wrote:
Sat Feb 03, 2018 7:55 pm
Their customer service is good, but their website is a mess,
Um, have you been to one of their competitors' web sites lately? Say Walmart, or Target, or Sears? At least Amazon's pages don't crash or take minutes to load, I can expect to find what I'm looking for, and their suggestions usually aren't too far off the mark. Also, Amazon has convinced a lot of people that, by paying for shipping a year in advance, they are somehow getting it for free. That's brilliant marketing, because who doesn't like free stuff, even when you have to pay for it?
Yes. Their competitors have their own problems, but in general are less cluttered and better organized. In my opinion, it's really, really pathetic how badly sorted Amazon's menus are. If I know an exact model number I want, I can find it easily enough by doing a search, but if I want to browse a product type, it's hit or miss whether I will get relevant results. To call up one example I shopped for recently, if I follow the menus to home theater receivers, only about half the results on the first page are home theater receivers. I also remember browsing the Prime Day sales, and giving up on the entire sale because the sorting was so bad. I was browsing tools to see if there were sales on for items I was considering buying, but the last straw was something like 2/3 of the results were cleaning products, not tools, and that pattern continued for pages of results that Amazon had supposedly sorted by category.

And then for fun they'll do things like remove the ability down-select search results by price range for a week.

Meanwhile, if I go to a competitor like Newegg, one click can exclude all 3rd party sellers, and I can drill down logically through the menus without getting mountains of results I was trying to exclude by using the menus. And Newegg almost always beats Amazon on price, sometimes significantly.

Amazon has plainly been one of the biggest parts of the retail world's online evolution for quite a few good reasons, but they're struggling under the complexity of the business they've built and the pressure to grow as quickly as possible.

denovo
Posts: 4310
Joined: Sun Oct 13, 2013 1:04 pm

Re: Amazon Stock - Can this giant be stopped?

Post by denovo » Sat Feb 03, 2018 10:12 pm

I bet a lot of people thought Wal-Mart was going to devour the entire retail market 12 years ago.
"Don't trust everything you read on the Internet"- Abraham Lincoln

User avatar
F150HD
Posts: 1571
Joined: Fri Sep 18, 2015 7:49 pm

Re: Amazon Stock - Can this giant be stopped?

Post by F150HD » Sun Feb 04, 2018 12:40 am

Smorgasbord wrote:
Sat Feb 03, 2018 2:40 pm
These days, I hardly shop at Wal-Mart as their prices are not competitive on many things (even ignoring the general low quality of their products).
Not what I've been seeing more and more lately when I do go to Walmart. Walmart seems to be directly competing w/ Amazon by matching their in house prices to the prices on Amazons site. Have seen it multiple times lately and have been affected by it just in the past week changing oil on my car.

Image

price below was IN store cost actually
Image

Carl53
Posts: 1595
Joined: Sun Mar 07, 2010 8:26 pm

Re: Amazon Stock - Can this giant be stopped?

Post by Carl53 » Sun Feb 04, 2018 6:48 am

I was recently surprised to end up purchasing transmission fluid from WalMart online instead of Amazon. Amazon sold 3 gal cases at 71.57 and 6 quart cases at 45.65 while Walmart sold individual gallons at under 18. Bought five gallons for about $88, instead of having to go with 6 gallons for $143. Actually I probably could have ordered one 3 gal case from Amazon and two gallons locally at autoparts store for around $28 each for a total of about $128. Typically I avoid Walmart stores but this was the second time in the last few months where Walmart online was significantly a better deal or offered something not available in quantity/price from Amazon. I did have to go to the Walmart store to pick up the transmission fluid.

danaht
Posts: 506
Joined: Sun Oct 18, 2015 11:28 am

Re: Amazon Stock - Can this giant be stopped?

Post by danaht » Sun Feb 04, 2018 8:22 am

Theoretical wrote:
Sat Feb 03, 2018 10:07 pm
danaht wrote:
Sat Feb 03, 2018 9:57 pm
If Amazon tries to buy Target - then I think the government might try to stop that. Otherwise - it probably won't be stopped for a while.
I threw up a little when I read that prediction.
I somewhat agree with the prediction. I think Amazon needs more brick and mortar space to compete with Walmart. There is just not enough Whole Foods for that to be a sufficient customer distribution place. Amazon no longer enjoys the benefit of not charging sales tax in many states, and the lower rates from the US Postal service won't last for long. In my opinion, Walmart has a much better opportunity than Amazon for long term retail sales. But having said that - Sears/Kmart will probably soon be bankrupt, so perhaps they can just buy the physical stores as these start to close.
Last edited by danaht on Sun Feb 04, 2018 8:25 am, edited 1 time in total.

Dottie57
Posts: 4308
Joined: Thu May 19, 2016 5:43 pm

Re: Amazon Stock - Can this giant be stopped?

Post by Dottie57 » Sun Feb 04, 2018 8:23 am

willthrill81 wrote:
Sat Feb 03, 2018 9:48 pm
Dottie57 wrote:
Sat Feb 03, 2018 9:28 pm
madbrain wrote:
Sat Feb 03, 2018 8:50 pm
Dottie57 wrote:
Sat Feb 03, 2018 1:48 pm
Revenue and growth with limited profits - what good is it to an invester?
It won't always be that way. Once they eliminate their competition, they can raise prices and profits will shoot up. That's likely when government intervention will occur.
I've been hearing about raising prices and big profits for more than a decade..../yawn
You know which retailer has more than 80% as much sales revenue as Amazon? Walgreen's. And their earnings per share are over 90% as good as Amazon's. Yet their market cap is only about 10% as much as Amazon's.

Irrational exuberance anyone? Bueller?
As an aside, I love Walgreens. It is a small general store. My favorite things are the goofy musical toys that come out for holidays.

If I am sick and out of food, Walgreens has food to tide me over.

User avatar
Smorgasbord
Posts: 352
Joined: Fri Jun 10, 2016 8:12 pm

Re: Amazon Stock - Can this giant be stopped?

Post by Smorgasbord » Sun Feb 04, 2018 9:56 am

F150HD wrote:
Sun Feb 04, 2018 12:40 am
Smorgasbord wrote:
Sat Feb 03, 2018 2:40 pm
These days, I hardly shop at Wal-Mart as their prices are not competitive on many things (even ignoring the general low quality of their products).
Not what I've been seeing more and more lately when I do go to Walmart. Walmart seems to be directly competing w/ Amazon by matching their in house prices to the prices on Amazons site. Have seen it multiple times lately and have been affected by it just in the past week changing oil on my car.
I don't do much Amazon shopping (see second paragraph of quoted post), so my comment was more related to how Wal-mart was "stopped" in their expansion by being out competed by others (not necessarily Amazon).

Using your motor oil example, I would point to Menards as my local store that is out competing Wal-mart. Just doing a quick check, of Valvoline 10W-40 Motor Oil, Wal-Mart sells theirs for $4.27, and Menards is selling theirs for $3.97 with an additional 44 cent mail in rebate available. Looking at food, my local Aldi crushes my local Wal-mart in terms of price and quality (although not in terms of selection).

User avatar
LadyGeek
Site Admin
Posts: 47500
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Amazon Stock - Can this giant be stopped?

Post by LadyGeek » Sun Feb 04, 2018 10:01 am

This thread has run its course and is locked (derailed to discuss shopping). See: Locked Topics
Moderators or site admins may lock a topic (set it so no more replies may be added) when a violation of posting policy has occurred. Occasionally, even if there are no overt violations of posting policy, a topic (or thread) will reach a point where the information content of the discussion has been essentially exhausted and further replies are much more likely to cause distress to the community than add anything of value.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Locked