Amazon: Recent Quarter Is A Reminder That Red Flags Should Not Be Ignored

Summary:

  • After falling 25% since April of last year, a sudden spike in Amazon’s share price in January is sparking a fear of missing out.
  • The pressure for cost-cutting measures will likely increase as profitability and free cash flow remain elusive.
  • Enterprise spending is waning and competition in the cloud space is intensifying, which creates additional risks for AWS.

AWS re:Invent 2022

Noah Berger/Getty Images Entertainment

Amazon (NASDAQ:AMZN) has just reported its full year results for fiscal year 2022 and with that investor enthusiasm has cooled off as we were once again reminded that share prices could be detached from business

Chart
Data by YCharts

Chart
Data by YCharts

Amazon Net Sales

Amazon Q4 2022 Earnings Presentation

CPI

FRED

U.S. Retail Sales

FRED

Amazon Operating Income

Amazon Q4 2022 Earnings Presentation

Amazon Sales By Segment

Amazon SEC Filing

Chart
Data by YCharts

Amazon Free Cash Flow

Amazon Q4 2022 Earnings Presentation

Amazon Cash Flow vs. Stock-based Compensation

Prepared by the author, using data from SEC Filings

Amazon Web Services Net Sales and Profit

Amazon Q4 2022 Earnings Presentation

Amazon Margins By Segment

Prepared by the author, using data from SEC Filings

Amazon Web Services (AWS) sales growth and margins

prepared by the author, using data from SEC Filings


Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Please do your own due diligence and consult with your financial advisor, if you have one, before making any investment decisions. The author is not acting in an investment adviser capacity. The author’s opinions expressed herein address only select aspects of potential investment in securities of the companies mentioned and cannot be a substitute for comprehensive investment analysis. The author recommends that potential and existing investors conduct thorough investment research of their own, including detailed review of the companies’ SEC filings. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice.



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