AMZN - Embedded Expectations Analysis - 2021 07 08
Amazon.com, Inc. (AMZN:USA) currently trades above recent averages relative to UAFRS-based (Uniform) earnings, with a 46.1x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about e-commerce demand, increases in operating costs and capex, and AWS growth.Specifically, management may have concerns about the sustainability of e-commerce demand in North America, the pace of AWS growth, and continued increases in COVID-19-related operating costs. In addition, they may lack confidence in their ability to limit downtime, improve 1-day shipment percentages in Europe, and adopt Prime benefits across the board. Furthermore, they may be overstating the capabilities of new deep learning models to show more relevant sponsored products. Finally, they may be concerned the continued increases in capex and they may lack confidence in their ability to maintain their backlog to revenue conversion rate.
Amazon.com serves consumers through its online and physical stores. The company also manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, and Ring, and the company develops and produces media content. The company operates customer service centers and provides programs that enable sellers to grow their businesses, sell their products in its stores, and fulfill orders through the company The company serves developers and enterprises of various sizes, including start-ups, government agencies, and academic institutions, through its Amazon Web Services segment, which provides a set of global compute, storage, database, and other service offerings. The company also provides services, such as advertising.
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