Displaying items by tag: Amazon

(Seattle)

Amazon may get all the fan fare, but Walmart is lurking. For many years, Amazon was considered so far ahead of rivals in ecommerce, that anyone catching up with it was considered unlikely. And while Amazon is still the undisputed leader, that view is changing. Walmart’s most recent earnings show that its commitment to ecommerce is thriving. Walmart is leveraging its food business particularly well in transforming its operation. The company is already operating click-and-collect food businesses in 600 US locations. Amazon only has such operations in 22 cities, via Whole Foods.

FINSUM: Both companies seem to want to be the “everything” of 21st century retail, but they are going about it from different angles. Amazon is going from ecommerce into groceries, and Walmart is doing the opposite.

(Seattle)

Amazon has seen some significant volatility lately. A weak earnings report sent the stock plummeting, and weaker top line growth is making some worry. The stock is down 17% since the beginning of October. However, the company’s bottom line seems likely to grow strongly as it starts to benefit from its massive scale. A Nomura analyst summarized the situation best (and interestingly), saying “AMZN’s size and scale are eclipsing its ability to suppress margins … Put simply, it seems AMZN sales and GP [gross profit] dollars are growing faster than their ability to spend”.

FINSUM: We don’t think Amazon is in trouble by any means. The company is just transitioning into a more mature state where topline growth will slow, but margins will rise.

(Seattle)

The Wall Street Journal ran a major headline on Amazon’s search for a new headquarters yesterday. The newspaper says that Amazon is now planning to not host a single headquarters but open two new smaller offices, splitting the total of 50,000 new hires between two locations. New York and Northern Virginia are said to be the choices. The WSJ says Amazon decided to have two because it would make hiring the tech talent they want easier.

FINSUM: While they were under no obligation follow through, this development does seem a little unfair to the cities bidding. Cities put in resources to get the full as-promised HQ from Amazon, so only getting half the return is perhaps a little disappointing (though still very positive).

(Seattle)

Amazon has been hit hard lately. The company’s surprise earnings caught the market off guard, which led to a big tumble in the shares, with the stock dropping over 10%. However, that presents a good buying opportunity, says Barron’s. The market was nervous because of the slowdown in revenue growth, but according to one analyst “We believe revenue growth is becoming a less relevant metric for Amazon given the outsize growth of the company’s cloud and advertising businesses”.

FINSUM: Amazon is still a fast growing business, but it is becoming more mature, which means expanding margins are going to be a key metric to watch. That is an area the company is excelling in.

(Seattle)

The hype over Amazon’s pending second headquarters is making quite a splash, and not just at the local level or in the media. Several investment funds, large and small, are or will deploy significant capital in trying to chase the real estate returns that seem likely to accompany the new location. Amazon says the new headquarters will employ 50,000 people over the next two decades, and existing tech-focused cities have seen huge gains in real estate on the back of the highly paid work force. Accordingly, several funds are being established to quickly buy real estate in the city that wins the new headquarters.

FINSUM: Buying real estate in the winning city seems like a very good long-term bet. We wonder how locals in these “finalist” cities are feeling given the upside and downside of Amazon coming.