Amazon: Turnaround Underway

Summary:

  • Amazon reported solid numbers for the fourth quarter, beating consensus estimates in most metrics.
  • However, bears claim that AWS slowdown is devastating as well as the company lacks of showing sustainable profits.
  • It seems like many market agents focus on the wrong valuation metrics and therefore draw a false conclusion about Amazon.
  • 2023 has the potential to become a real Game-Changer, surprising Investors with strong Cash Flows after a poor 2022.

Amazon fulfillment center building in Las Vegas

4kodiak/iStock Unreleased via Getty Images

In my latest analysis about Amazon (NASDAQ:AMZN) in October, I discussed why the Q3 numbers indicated an operating turnaround for the company in Q4 but mainly in 2023. With the latest presented numbers, I continue to

AWS Margin development

Author‘s calculations

AWS historic growth rate

Author‘s calculations

Cashflow & CAPEX Amazon quarterly

Cashflow & CAPEX quarterly (Author‘s calculations, Amazon earnings statements)

Chart
Data by YCharts

Chart
Data by YCharts

Chart
Data by YCharts

Revenue 2022 P/S Multiple Fair Value 2023e Revenue Fair Value 2023
Online Stores $ 220.004 0.8 $ 176.003 $ 228.000 $ 182.400
Physical Stores $ 18.963 1 $ 18.963 $ 18.800 $ 18.800
Third-Party $ 117.716 2.5 $ 294.290 $ 124.000 $ 310.000
Subscription $ 35.218 4 $ 140.872 $ 38.900 $ 155.600
AWS $ 80.096 7 $ 560.672 $ 90.378 $ 632.646
Advertising $ 37.739 6 $ 226.434 $ 47.500 $ 285.000
Others $ 4.177 2 $ 8.354 $ 4.000 $ 8.000
$514.000 $1.425.588 $551.000 $ 1.592.446
Marketcap. $1.000.000 43% 59%

Free Cashflow Model Amazon Stock

Free Cashflow Model Amazon (Author‘s calculations)


Disclosure: I/we have a beneficial long position in the shares of AMZN either through stock ownership, options, or other derivatives. 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.


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