re: AMZN down 15% after hours

That will teach those frickers to not give me the $75 credit that went into effect the day after I bought a XBox 360 Kinect bundle.

How does my arse taste now, Bezos?

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No business model should strive for a 0.7% operating margin. Margins were pathetic compared to historical performance and other e-commerce corporations(though Amazon has no true comp). A company with the branding and scale of Amazon shouldn't be fighting to break even.

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What other e-commerce corporations are you comparing it to? Seriously, this is not a facetious question. While it is pathetic compared to historical performance, I don't understand why you don't agree that its been totally beaten down in this particular quarter by the things that management stated. Obviously if you scale up your costs and the revenues don't follow as expected, that's one thing, but given the holidays AND the Fire, it seems clear to me on an operational basis why this would occur this quarter, and why you would not expect it to be ongoing. Since it seems you feel like this might be an inflection point of some sort, I'd definitely like to hear why you think that. Again, not facetious, I want to know what it is you're seeing that I am not.

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Shipping costs and revenue are broken out on page 21 of the 10-Q. Of course, Amazon's shipping costs are always going to be higher than shipping revenue due to the myriad of promotions they run (Free shipping for $25+, year-long student and mother trials for Amazon prime, etc). But net shipping costs as a % of revenue increasing nearly 30% YoY is concering.

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:shakesfist: The Q wasn't up when I looked yesterday, just the 8-K. Thanks. I don't have any disagreement with that point at all, that is definitely something to focus on in the future.

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Cash flow is definitely more important than income. But to explain why it dropped 10%+, the market is severely punishing momentum stocks (Netflix, First Solar, Green Mountain) that aren't meeting revenue and growth estimates.

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Netflix = because their subscriber base blew up when its supposed to be skyrocketing quarter over quarter, and their CEO is a scatterbrained box of rocks.
First Solar = I know absolutely nothing about whatsoever.
Green Mountain = two words, David Einhorn. Doesn't matter if he is right or wrong, he definitely has enough influence to move markets.

At least in the case of the first and the last, there's clearly something affecting those stocks other than purely financial performance.

I'm not disregarding that they fell slightly short of analyst estimates for revenue growth, but missing by a mere $60M out of $11B doesn't seem to augur for a 15 percent rip, especially given that the estimates in FY12/13 are significantly lower than current period estimates. I also don't follow AMZN so I have no idea what their history is in terms of beats, so I have no frame of reference for that other than my personal outlook. If they're AAPL like in their projections and beats, I would have to agree with you.

eta: Great conversation btw, you should post more often.

I buy pretty much everything off of Amazon, but that's just out of habit. The name of the game is volume, to be the low-cost provider, just like WMT. The structure is different, but the concept is the same (and so are the margins).

Down another 12 percent today, forward P/E to 63.

Some of the comps I looked at range from eBay (e-Commerce) to Barnes and Nobles (Books) to Google (Internet Company).

None are anywhere near perfect as Amazon seems to be the amalgamation of all three. But what I'm trying to say is the margins are already slim in a normalized operating environment (~3-5% historically) and no amount of fulfillment and marketing costs should justify such thin margins.

The point I'm trying to make it that sales and earnings have been diverging over the past few quarters. Eventually (and I think that time is now), investors will start to focus on earnings gains rather than revenue gains. No more passes for outsized investment spend that isn't translating into profits.

In short, Amazon is accelerating investment spending faster than revenue growth. Not my type of company even if the spending is somewhat justified for the buildout of Kindle Fire. I love both Netflix and Amazon as a consumer; hate them as companies.

Yeah I'll try to post more often but banking is killing me

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Yeah I'll try to post more often but banking is killing me

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In NY. Dunno how yall do it, my 60-hr/week IB-lite job is manageable, not sure I could squeeze in another 30 hrs a week.

Yeah that's not my style, I'm trying to work my way into a research position, not IB. Keep hustlin bro.

I was going to ask what your exit plan was, what sector are you in?

I really appreciate the input, man. I'd love to hear some of your thoughts on the healthcare sector when you find some time to post.