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Amazon.com Inc AMZN

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Amazon E-Commerce Growth Slows as COVID-19 Eases; Other Segments Still Strong; FVE Steady at $4,200

Dan Romanoff, CPA Equity Analyst

Analyst Note

| Dan Romanoff, CPA |

Wide-moat Amazon reported second-quarter results that were within its guidance range but were slightly short of investor expectations for both revenue and operating profit. Guidance for the third quarter is also light compared with FactSet consensus. In short, consumers' online shopping levels are returning to more normal levels as they shift some spending to other entertainment sources and offline shopping. Meanwhile, the company continues to add capacity at a breakneck pace in order to meet customer demand and one day delivery, even as it roughly doubled its footprint during the last 18 months. We see no cracks in the long-term story as Amazon remains well positioned to prosper from the secular shift toward e-commerce and the public cloud over the next decade. We note revenue weakness was limited to Amazon’s own online store segment, with other segments performing well and overall profitability impressive despite lower revenue. Our model changes are fairly modest, thus we are maintaining our $4,200 per share fair value estimate and see shares as undervalued.

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Company Profile

Business Description

Amazon.com Inc is a leading online retailer and one of the highest-grossing e-commerce aggregators, with $386 billion in net sales and approximately $482 billion in estimated physical/digital online gross merchandise volume, or GMV, in 2020. Retail related revenue represented approximately 83% of total, followed by Amazon Web Services' cloud computing, storage, database, and other offerings (12%), and advertising services and cobranded credit cards (6%). International segments constituted 27% of Amazon's non-AWS sales in 2020, led by Germany, the United Kingdom, and Japan.

Contact
410 Terry Avenue North
Seattle, WA, 98109-5210
T +1 206 266-1000
Sector Consumer Cyclical
Industry Internet Retail
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 1,298,000

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