What is Amazon's financial status?
Amazon.com, Inc. reported earnings results for the third quarter and nine months ended September 30, 2022. For the third quarter, the company reported revenue was USD 127,101 million compared to USD 110,812 million a year ago. Net income was USD 2,872 million compared to USD 3,156 million a year ago.
Amazon is a leading online retailer and one of the highest-grossing e-commerce aggregators, with $386 billion in net sales and approximately $578 billion in estimated physical/digital online gross merchandise volume, or GMV, in 2021.
Amazon ranks as one of the world's top companies by market value. As of January 27, 2023, Amazon had a market capitalization of $1 trillion. The company posted net income of $2.9 billion in the third quarter (Q3) of its 2022 fiscal year (FY). The three-month period ended September 30, 2022.
Operating income decreased to $12.2 billion in 2022, compared with $24.9 billion in 2021. North America segment operating loss was $2.8 billion, compared with operating income of $7.3 billion in 2021. International segment operating loss was $7.7 billion, compared with operating loss of $0.9 billion in 2021.
Amazon Retail remains flat, loss fattened 22%
Sale of products from the retail segment grew only 8% to Rs 1,710 crore in FY22 from Rs 1,585 crore in FY21.
Compare AMZN With Other Stocks.
|Amazon Annual Long Term Debt (Millions of US $)|
- Business model that can be imitated.
- Seasonality of the business.
- Weak competitive position of Amazon's Fire Phone.
- Damage to the brand image due to tax avoidance controversies in USA, UK and Japan.
- Working conditions for warehouse workers.
The biggest risks of investing in Amazon.com, Inc. (NASDAQ: AMZN) stock are increasing competition, profit potential uncertainty, revenue growth uncertainty, speculative valuation and share price volatility.
Amazon.com Inc. reported fourth-quarter total sales of $149.20 billion, a 9% jump from a year earlier. Ecommerce sales dropped 2% year over year to $64.53 billion in Q4 2022. For the full year of 2022, ecommerce sales fell 0.3%.
The company fell out of the trillion-dollar club last month. Much of Amazon's misfortunes are tied to the economy and macro environment. Soaring inflation and rising interest rates have pushed investors away from growth and into companies with high profit margins, consistent cash flow and high dividend yields.
Why is Amazon not making profit?
Amazon isn't profitable because it's incapable of turning a profit abroad. Instead, the company continues to invest in growth by adding Prime benefits in these countries and pouring billions into emerging markets like India, which Bezos sees as a generational bet.
Amazon is just one example of a company that did that by focusing on growth and revenue rather than profit. Instead of putting all of its energy into making money, it put effort into making its customers happy and expanding its business.
Amazon Profitability 1994-2022. Amazon was not profitable in 2022. On about $514 billion in revenue for 2022, Amazon generated a net loss of 2.7 billion.
Typically, Amazon pays its warehouse workers up to $5,000 to quit their jobs after peak seasons like the holidays as a way to pare down its workforce in the slowdown that follows.
Amazon on Wednesday announced it is planning to lay off more than 18,000 jobs amid a push to cut costs. Amazon is laying off 18,000 employees, the tech giant said Wednesday, representing the single largest number of jobs cut at a technology company since the industry began aggressively downsizing last year.
RISK OF LOSS
All purchases of physical items from Amazon are made pursuant to a shipment contract. This means that the risk of loss and title for such items pass to you upon our delivery to the carrier.
Amazon reports its first unprofitable year since 2014 The biggest culprit was Amazon hefty investment in the electric automaker Rivian, whose value plummeted last year. Amazon also contends with the need to recalibrate after a pandemic-era upsurge.
Carrying virtually no net debt, Amazon.com has a very light debt load indeed.
- Compromised Cash Flow. Amazon has a strict structure around payouts. ...
- High Degree of Competition. Amazon allows a large number of sellers to sell the same product. ...
- Packaging Restrictions. ...
- Strict Inventory Expectations. ...
- High Amazon Fees. ...
- Way Forward.
In comparison to other websites, Amazon offers a more user-friendly experience to its clients. Major differentiators include improved search and query capabilities, suggestions based on prior purchases, one-click ordering at check-out, numerous user reviews and ratings, and dash buttons for automatic re-buying.
What is Amazon's future strategy?
Strategy: An Eye on the Future
Amazon's business strategy is based on one primary goal: to meet every customer need and want with a superior experience, so Amazon becomes part of every single purchase made.
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Despite these intriguing expansion prospects, Amazon's stock can be had for a bargain price. Following its sharp decline in 2022, its shares are now trading for less than 22 times its cash flow from operations. That's near the bottom of its typical range.
International Peers - Amazon.com Inc.
|Company Name||Amazon.com Inc.|
|Market Cap. last (mUSD)||1 072 320|
|Year-To-Date Price Change (in local currency)||25.2%|
Amazon stock price stood at $112.91
According to the latest long-term forecast, Amazon price will hit $125 by the end of 2023 and then $150 by the middle of 2024. Amazon will rise to $200 within the year of 2025, $250 in 2026, $300 in 2028 and $400 in 2034.
If you value each business segment individually, it's easy to determine that Amazon's stock is undervalued.
In the third quarter of 2022, Amazon's net income amounted to nearly 2.9 billion U.S. dollars, although previous quarters had shown negative values. Online product sales are the biggest revenue segment of the e-tailer, followed by retail third-party seller services.
Jan. 30, 2002 -- I was wrong. It's interesting how muted the response was to the news last week that Amazon.com — after six years in business and as the poster child for the dot-com boom and bust — finally announced real profits.
Amazon intentionally posts low profits because it takes the vast majority of the money it earns and invests it right back into the company so that it will profit all the more in the future.
The number of Amazon customers who said they were “extremely” or “very satisfied” with the company in a recent survey has fallen from 88% over a decade ago to 79% in 2022 (although that is an improvement from 65% in 2020), according to investment firm Evercore EVR +1.7% ISI. Shopper approval declining below rivals.
What is the future outlook for Amazon?
Stock Price Forecast
The 48 analysts offering 12-month price forecasts for Amazon.com Inc have a median target of 134.00, with a high estimate of 171.00 and a low estimate of 80.00. The median estimate represents a +29.62% increase from the last price of 103.38.
High Growth Earnings: AMZN's earnings are expected to grow significantly over the next 3 years. Revenue vs Market: AMZN's revenue (11.2% per year) is forecast to grow faster than the US market (7% per year). High Growth Revenue: AMZN's revenue (11.2% per year) is forecast to grow slower than 20% per year.
What were some of the biggest failures of Amazon? Amazon Fire Phone, Pets.com, Askville, and Amazon Destinations are some of the biggest product failures of Amazon.
Amazon is built to last, even if times are tough
Even though AWS' operating income margin dropped to 26.3% in the third quarter, down from 30.3% in the prior-year period and 29% in Q2 2021, the segment is still posting strong margins and remains primed for long-term growth.
The company's long-term earnings outlook remains attractive. Considering that, Amazon looks cheap right now, as it trades at less than two times sales. All of this means, whether Amazon rebounds in 2023 or later, investors still are likely to win big over time.