Below are key drivers of Amazon's value that present opportunities for upside or downside to the current Trefis price estimate for Amazon:
For additional details, select a driver above or select a division from the interactive Trefis split for Amazon at the top of the page.
Amazon is an online retailer which sells electronics, books, retail consumer goods, music, games, apparel and other merchandise to consumers in the U.S., Canada, the United Kingdom, Germany, Brazil, France, China, Japan, India Mexico, Netherlands, Italy and other countries. The company also provides web services such as cloud computing and online storage to web sites and web developers.
Amazon Web Services business is the most valuable segment for Amazon due to the company's high growth within this segment. In recent years, consolidated AWS revenues have grown at high double digits. Despite the lowest revenue contribution, AWS is the most valuable segment due to high margins of cloud computing as compared to e-commerce retail business which operates on razor thin margins.
The growth in Amazon's Web Services has become a critical factor driving the company's expansion globally. Several companies continued to adopt these services in recent years. Besides helping big businesses, the company’s cost efficient web services are also useful for young start-ups that may have cash restrictions.
The growth in the AWS segment has been massive - the annual growth in AWS revenues came in at 70% in 2015, 55% in 2016, 43% in 2017 and 46% in 2018. Apart from this, the company also showed strong profitability in the cloud-services business as margins have improved in this segment in successive years.
Prime subscriptions grew by 53% and 51% year-over-year in 2014 and 2015, respectively, with stronger growth across international markets than within the U.S. Amazon's total Prime members (not reported by the company) was estimated to be 50 million in 2015, which increased to 65-70 million in 2016 and subsequently to over 100 million by the end of 2018. The subscription offers free shipping along with access to video content. This implies that streaming content is just positioned as one of the key features of the service to attract subscribers. Amazon offers other integrated product and services offerings through Prime membership such as Echo, Amazon’s Fire TV Stick, and Amazon Basic Cables.
While the revenues earned from the Prime service subscriptions account for a small chunk of the company’s total sales, the margins from Prime customers are much higher than other customers. Additionally, according to various reports, Prime customers tend to buy almost twice as much as the regular customers. We believe Prime subscribers will continue to grow rapidly as Amazon is investing heavily in streaming content to lure in more buyers.
The global e-commerce market is growing rapidly as consumers continue to shift to Internet for their purchases. Much of this is being driven by growing Internet penetration, increasing adoption of Internet enabled devices such as tablets, notebooks and smartphones, and the continuing improvement in online payment systems. The global online retail market was valued at roughly $1.9 trillion in 2015 and $2.3 trillion in 2016, and is expected to grow to over $4 trillion by the end of the decade.
Amazon is making significant investments to expand its presence in regions such as China, India, Italy and Spain. While these investments will enhance revenue growth, however, this strategy could also raise margin pressure. Amazon will invest a couple of billion dollars on its Indian operations, but since the country’s e-commerce market is highly competitive, we believe it will be difficult for Amazon to attain profitability in the region for at least a couple of years.
Amazon's (NASDAQ:AMZN) advertising revenue growth over recent years, while logical, has come as a surprise to most. After all, Amazon is one of the world's largest retailers, and its retail business has been dominated by its e-commerce site, where GMVs have consistently risen. ...More
The U.S. advertising market has seen a marked shift in dynamics over the last decade due to the rise of digital advertising. In terms of component growth, non-digital revenues are expected to decline due to budget shifts towards digital. ...More
Google, Facebook, and Amazon are some of the largest and most successful companies in the tech world. In 2018, Google, Facebook and Amazon posted total revenues of $137 billion, $56 billion and $233 billion respectively. ...More
Amazon (NASDAQ:AMZN) reported its Q1 on April 25. The company beat consensus expectations on revenue (+17% y-o-y) and EPS (+$2.44 per share). Below are some highlights from the earnings announcement and call: Management's announcement of moving the two-day delivery to same day delivery for Prime members, leveraging Amazon’s 20 plus years of experience in logistics. ...More
Amazon (NASDAQ:AMZN) is scheduled to report its Q1 earnings on April 25. The company’s Q4 results beat consensus expectations, despite issues in Indian operations and accounting changes due to Whole Foods. We expect the company to see sustained growth across segments this time around. ...More
Amazon (NASDAQ:AMZN) breaks out its business into three segments: North America: This segment generates revenue from retail sales of consumer products and subscriptions booked through North American stores. ...More
Amazon (NASDAQ:AMZN) saw strong y-o-y revenue growth in its fourth quarter, and also expanded its margins in North America, which resulted in strong cash flows. The company's Q4 TTM free cash flow of $19.4 billion was up +134% y-o-y. ...More
Amazon's (NASDAQ:AMZN) reported its Q4 earnings on January 31. In addition to beating consensus estimates on revenue and EPS, the company more than doubled its trailing twelve months free cash flow. Amazon’s total revenue grew to $72. ...More
Amazon's (NASDAQ:AMZN) Q4 earnings release on January 31 will be eagerly watched to understand the company’s standing in international markets, as well as the performance in the cloud market in the context of claims made by Oracle. We expect Amazon to continue growing profitable across all segments, except the International business due to competitive pressures. ...More
Amazon's (NASDAQ:AMZN) retail and cloud businesses have long had an interesting dichotomy, with the retail business historically burning cash and Amazon Web Services (AWS) generating solid profits. ...More
Amazon (NASDAQ:AMZN) has evolved over the years from an online bookseller to a powerhouse that has the potential the disrupt any business landscape it enters. In recent years, Amazon has become a massive distribution platform and a dominant cloud services provider. ...More
Payments processor Stripe recently raised a round of financing that valued the company at around $20 billion, a significant jump from its $9 billion valuation in 2016. ...More
Amazon (NASDAQ:AMZN) announced its third quarter results on October 25, reporting a sustained high double digit (39%) year-over-year increase in net revenues to just under $56.6 billion. ...More
Amazon (NASDAQ:AMZN) is scheduled to report its third quarter results on Thursday, October 25. The e-commerce giant has reported strong revenue growth in recent years, driven by Amazon Web Services (AWS) as well as its core commerce business. ...More
Amazon (NASDAQ:AMZN) has reported a steady revenue growth in recent years across revenue streams. Amazon's core commerce operations include products sold on its websites and platforms, which make up over 60% of the company's net revenues. ...More
Amazon’s (NASDAQ: AMZN) business has two main segments – the e-commerce business and cloud computing platform Amazon Web Services (AWS). The difference in the nature of these two businesses warrants analyzing them independently. Thus, we apply revenue multiples to each of Amazon's business divisions to arrive at a sum of the parts (SOTP) valuation for the stock. ...More
Tech behemoth Amazon (NASDAQ:AMZN) is most widely known for its online e-commerce business. However, Amazon's cloud services business Amazon Web Services is a massively important segment for the company. Amazon derives over 40% of its total value from Amazon Web Services, per Trefis estimates, despite generating only around 10% of net revenues in 2017. ...More
Amazon (NASDAQ:AMZN) has successfully managed to capture a huge chunk of the e-commerce market, particularly in the U.S. While dominating global markets is a long-term goal for the company, it is important for Amazon to maintain stickiness among its existing customers. ...More
Amazon (NASDAQ:AMZN) has reported massive revenue growth in recent years, with revenues surging from just over $60 billion to almost $180 billion from 2012 through 2017. While much of the company's top-line growth has been on an organic basis in this period, Amazon made headlines last year when it announced the $13. ...More
Amazon (NASDAQ:AMZN) has reported strong growth metrics across business segments in recent years. Much of the company's top line growth has been on an organic basis, with the only major exception being the $13.7 billion addition of Whole Foods and resulting physical stores to Amazon's offerings. ...More