Amazon.com, Inc. (AMZN) – Buy
I added to my position in Amazon.com, Inc. (AMZN) today at $1696.89. Amazon is still our largest position at this time.
I’ve bought shares in Amazon several times now. As mentioned previously, we are an active seller of our Wondermugs and other products on Amazon.com and also utilize Amazon ads to promote our products as well. Sales continue to grow year over year so we can project that if our sales are continuing to increase that probably sales overall are increasing. Also, our month-to-month ad spend is higher. Amazon has also been improving the ad platform to provide more metrics and ability to adjust campaigns to be more like Facebook and Google which is great to see and should help make advertisers more comfortable with platform.
I also believe that their revenue/profits from advertising will be good as we spent a lot ourselves on ads, much more than last year. Amazon added more ad options I believe and they started providing more options in the backend and transparency more like Google Ads provides which should help increase budgets from advertisers like myself.
It seems that there shift to focusing on 3rd party sellers is working well in that it aids in profitability in terms of getting a percentage of every sale without needing to invest in inventory, getting paid for inventory storage fees and advertising fees. This seems to be the better way to go rather than buying inventory directly and it works well for sellers too in that they can send inventory to Amazon and Amazon takes care of all the fulfillment and most of the customer service, it’s a great partnership between brands and Amazon. It can be great opportunity for both small and large brands alike. It still allows customers to interact directly with brands as well.
For the companies we operate, Amazon is becoming increasingly larger portion of our expenses that pays off well for us.
The current coronavirus scares should only drive more traffic/sales online if people are staying home more. Walmart seems to be their biggest threat. I do shop more Walmart.com myself and do have shares in Walmart as well. I think there’s certainly room for both to thrive and the competition between the two makes each of them better.
There’s also Amazon Web Services which is the dominant cloud services provider and they should be able to continue dominating this space, although Microsoft and Google are certainly threats, but there’s certainly room for all three to share the space. I don’t utilize Amazon Web Services much directly, but many services I use do. I do use the Amazon Simple Email Service to send bulk email which works really well. It’s very affordable at only $0.10 for every 1,000 emails you send. The emails have a very high rate of deliverability due to their reputation.
Stock is currently trading at a PEG of 1.40.