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Investment ideas

Q3 2019 : stimm worthless in trumpdepression based on free cash flows

Update Q4 : It is still Amaponzi, the biggest bubble of all time. FY free cash flow is 5 billion $ ( included the option diution ) , this on 20 times gives a mere 100 billion. Still 80 percent downside in the name.

 

Update Q3 : It is Amaponzi, the biggest bubble of all time.

 

Update Q2 2018 figures confirm the thesis : US operations strong but risk of US post and trade wars, international losses  and AWS very strong. Once AWS goes into deflation, then the stock is probably worth 60 bucks. It is Amaponzi. THE BIGGEST BUBBLE OF ALL TIME.

Short Amazon in Trumpdepression. In deflation , amazons weak margins will get hit. Currently the highly profitable AWS division is subsidizing the lossmaking package business. Higher sales, higher losses and this before the big deflation.

If we look at product sales ( leave out the very profitable AWS and other service business ) Amazon had product sales Q4 16 of 30.6 billion , cost of sales were around 29 billion and for fulfillement were around 6 billion ( we leave out marketing and other sg@a ) so the loss was 4,6 billion in Q4 16. Then look at Q4 17, product sales 41 billion , cost of sales of 39 billion and fulfimment of 9 billion leaving us with a loss of 7 billion , up from 4,5 billion in Q4 2016. So increased sales and success means higher losses. And this before Trump post, deflation, trade wars,etc ). 

AWS is highly profitable , but could face deflation

You want free cash flow here it is : 2017 : operating cash flow 18,4 billion, depreciation which can be seen as proxy of capex is 11,4 ( real capex was 11,4 ) , stock option expense was 4.2 and principal payment of capital lease was 4.8 billion. You can argue on the stock option expense but is dilution so an expense. So free cash flow close to zero ( even negative by 2 billion ). 

Let us get Benjamin Graham of the shelves. In general , should not pay more then 15 times earnings of the last 7 to 10 years. Amazon earnings over the last 10 years 933 million, if we put these on 20 times earnings we get fundamental value buy support at 38 a share.

Do not dismiss the past, we are facing debt, deflation, trade wars and a demograhic cliff

Could be down 80 to 90 percent in two ,three years