We all make mistakes. And I made one in September 2021 when I purchased Amazon stock above $150 per share. Following an equity (and tech) bloodbath in 2022, it now trades at $96.
On the Invezz podcast, I hosted ex-Amazon employee current expert Brittain Ladd to chat about the stock’s outlook.
Ladd has been vocal about what he believes could improve Amazon’s fortunes. One area of focus is the brick-and-mortar retail side, with Amazon capturing only 2% of the grocery market, compared to Wallmart who own a 25% cut.
The Amazon Go initiative, with the walk-out technology, is a neat piece of innovation, but Ladd bemoans that it’s not much more than a gimmick, failing to increase sales. Instead, he advocates for an aggressive acquisition strategy.
Ladd originally recommended Amazon purchase Whole Foods, but says that he acquisition has failed to live up to its expectations. Instead, he wants Amazon to make a move for a retailer like Target, which will allow it to place a Whole Foods inside every store.
He also puts forward killing the Amazon Fresh and Amazon Go brands, rebranding them as Whole Foods+ / Whole Foods to Go.
But how will all this affect the stock, and how is Amazon placed right now as an investment? The below chart shows that, if you drop the ball like me, the ride could be painful – this is the Amazon stock price since I bought in. Ouch.
I pointed out that Amazon is now trading at an Enterprise-to-EBITDA ratio of 28, having averaged 52 over the period between 2008 and 2022. We dug into this side of things a bit, while also acknowledging the very real matter that Amazon is so much more than retail.
Its current CEO and successor to Jeff Bezos, Andy Jassy, was chosen for the role partially because of his roaring success heading up the Amazon Web Service (AWS) side of the business for 15 years. It was responsible for over half of Amazon’s profit every year since 2014.
It also owns a 33% market share in the cloud computing space, a colossal number. Ladd and I dug into this, and how this diversification impacts the valuation.
Of course, macro is unavoidable when talking about any stock, and we had to cover this with regard to when Amazon could present as a potential investment opportunity. Easier said than done with regard to market timing, though – a core mantra of long-term investing which I have covered plenty in the past.
We touched on this and more – including the latest craze, ChatGPT, and how Ladd wants this integrated with Amazon – in the episode. If you are an Amazon investor, considering buying or selling, or just outright curious about one of the biggest companies on the planet, then you might get something out of it.
Continue the conversation on Twitter with @InvezzPortal, @DanniiAshmore. To follow Brittain Ladd, he is best reached on LinkedIn at www.linkedin.com/in/brittainladd.
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