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Category: Stock Market and Amazon (AMZN)
Date: 3 February 2021 Stock Price of Amazon (AMZN): $3471.31 Market Capital of Amazon: $1.75 trillion We take a look at the 1st quarter earnings release of their 2021 fiscal year of the world's biggest online retailer and one of the biggest companies in the world in terms of market capital Amazon. The group reported sales of $108.5 billion and net income of $8.17 billion for the 1st quarter of their 2021 fiscal year.
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Amazon is also announcing today that Jeff Bezos will transition to the role of Executive Chair in the third quarter of 2021 and Andy Jassy will become Chief Executive Officer at that time. Amazon is what it is because of invention. We do crazy things together and then make them normal."
About Amazon Inc (AMZN)
Amazon is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. Customer reviews, 1-Click shopping, personalized recommendations, Prime, Fulfillment by Amazon, AWS, Kindle Direct Publishing, Kindle, Fire tablets, Fire TV, Amazon Echo, and Alexa are some of the products and services pioneered by Amazon.
Amazon is currently one of the worlds largest companies in terms of market capital. And it forms part of the famed "FAANG" stocks. FAANG is an acronym for Facebook, Amazon, Apple, Netflix and Google.
Amazon is currently one of the worlds largest companies in terms of market capital. And it forms part of the famed "FAANG" stocks. FAANG is an acronym for Facebook, Amazon, Apple, Netflix and Google.
Overview of Amazon's 4th quarter 2020 earnings report
!st quarter 2021 earnings highlights
Segmental information regarding Amazon for their 1Q 2021:
- Operating cash flow increased 69% to $67.2 billion for the trailing twelve months, compared with $39.7 billion for the trailing twelve months ended March 31, 2020.
- Free cash flow increased to $26.4 billion for the trailing twelve months, compared with $24.3 billion for the trailing twelve months ended March 31, 2020.
- Free cash flow less principal repayments of finance leases and financing obligations increased to $14.9 billion for the trailing twelve months, compared with $14.3 billion for the trailing twelve months ended March 31, 2020.
- Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations increased to $16.8 billion for the trailing twelve months, compared with $11.7 billion for the trailing twelve months ended March 31, 2020.
- Common shares outstanding plus shares underlying stock-based awards totaled 519 million on March 31, 2021, compared with 513 million one year ago.
- Net sales increased 44% to $108.5 billion in the first quarter, compared with $75.5 billion in first quarter 2020. Excluding the $2.1 billion favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 41% compared with first quarter 2020.
- Operating income increased to $8.9 billion in the first quarter, compared with operating income of $4.0 billion in first quarter 2020.
- Net income increased to $8.1 billion in the first quarter, or $15.79 per diluted share, compared with net income of $2.5 billion, or $5.01 per diluted share, in first quarter 2020.
Segmental information regarding Amazon for their 1Q 2021:
- Net sales: North America: $64.4 billion
- Net sales : International: $30.65 billion
- Net sales: Amazon Web Services (AWS) : $13.5 billion
Amazon's management commentary on their 4th quarter 2020 earnings
SEATTLE—(BUSINESS WIRE) April 29, 2021—Amazon.com, Inc. (NASDAQ: AMZN) today announced financial results for its first quarter ended March 31, 2021.
“Two of our kids are now 10 and 15 years old—and after years of being nurtured, they’re growing up fast and coming into their own,” said Jeff Bezos, Amazon founder and CEO. “As Prime Video turns 10, over 175 million Prime members have streamed shows and movies in the past year, and streaming hours are up more than 70% year over year. Amazon Studios received a record 12 Academy Award nominations and two wins. Upcoming originals include Tom Clancy’s Without Remorse, The Tomorrow War, The Underground Railroad, and much more. In just 15 years, AWS has become a $54 billion annual sales run rate business competing against the world’s largest technology companies, and its growth is accelerating—up 32% year over year. Companies from Airbnb to McDonald’s to Volkswagen come to AWS because we offer what is by far the broadest set of tools and services available, and we continue to invent relentlessly on their behalf. We love Prime Video and AWS, and we’re proud to have them in the family.”
Our Vision to be Earth’s Best Employer and Earth’s Safest Place to Work
“Two of our kids are now 10 and 15 years old—and after years of being nurtured, they’re growing up fast and coming into their own,” said Jeff Bezos, Amazon founder and CEO. “As Prime Video turns 10, over 175 million Prime members have streamed shows and movies in the past year, and streaming hours are up more than 70% year over year. Amazon Studios received a record 12 Academy Award nominations and two wins. Upcoming originals include Tom Clancy’s Without Remorse, The Tomorrow War, The Underground Railroad, and much more. In just 15 years, AWS has become a $54 billion annual sales run rate business competing against the world’s largest technology companies, and its growth is accelerating—up 32% year over year. Companies from Airbnb to McDonald’s to Volkswagen come to AWS because we offer what is by far the broadest set of tools and services available, and we continue to invent relentlessly on their behalf. We love Prime Video and AWS, and we’re proud to have them in the family.”
Our Vision to be Earth’s Best Employer and Earth’s Safest Place to Work
- Amazon ranked #1 in the U.S. on LinkedIn’s 2021 Top Companies, an annual list identifying the most sought-after places to work based on their ability to attract and retain the best talent, including promotions, opportunities for employees to learn new skills, hiring people from all backgrounds and levels of education, and gender diversity. In addition, Amazon ranked #2 on the Fortune World’s Most Admired Companies list and #3 on Boston Consulting Group’s Most Innovative Companies list.
- In partnership with government and public health officials across the globe, Amazon is rapidly expanding on-site COVID-19 vaccination programs for its front-line employees and contractors. In addition to offering COVID-19 testing on-site, Amazon has hosted vaccination events at fulfillment centers, sort centers, delivery stations, and AWS data centers in 29 states, reaching more than 300,000 front-line employees and contractors. In some locations, Amazon opened the vaccination program to employee household members. Given the vaccination program’s progress in the U.S., it will soon expand to front-line employees in other countries.
- Amazon is committed to leading the way for workplaces around the world to proactively manage—and prevent— work-related musculoskeletal disorders (MSDs) by drawing on expertise in innovation and technology, and collaborating with proven thought leaders and scientists. MSDs are common in the type of work done in warehouse operations and are more likely to occur during an employee’s first six months. Amazon’s increased attention to early MSD prevention is already achieving results. From 2019 to 2020, overall MSDs decreased by 32% and MSDs resulting in time away from work decreased by more than half.
- Amazon is expanding its workplace health and safety program WorkingWell with the aim of cutting recordable incident rates by 50% by 2025. WorkingWell is currently available to 859,000 employees at 350 sites across North America and Europe. Through the program, small groups of employees are coached on body mechanics, proactive wellness, and safety. In addition to reducing workplace injuries, these concepts have a positive impact on regular dayto-day activities and have contributed to reducing MSD recordable incident rates.
- Since 2020, in partnership with Crossover Health, Amazon opened 17 neighborhood health centers for employees and their families in the areas around Dallas–Fort Worth, Texas; Detroit, Michigan; Louisville, Kentucky; Phoenix, Arizona; and San Bernardino, California. Centers are located next to where employees live and work to provide affordable, convenient, and high quality health care, and patients report a 90% satisfaction score. Amazon is evaluating expansion of the program so that even more employees can access quality care whenever, and wherever, they need it.
- Amazon is fitting delivery vehicles with camera safety technology and artificial intelligence to capture real-time data (such as following safe distance and road conditions) to identify at-risk driving events. These technologies are used to help keep drivers and the communities where Amazon delivers safe. When this technology was piloted in 2020 on over two million miles of delivery routes, crashes decreased 48%, stop sign violations decreased 20%, driving without a seatbelt decreased 60%, and distracted driving decreased 45%.
Shopping
Financial Guidance
The following forward-looking statements reflect Amazon.com’s expectations as of April 29, 2021, and are subject to substantial uncertainty. Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic conditions and customer spending, world events, the rate of growth of the Internet, online commerce, and cloud services, and the various factors detailed below. This guidance reflects our estimates as of April 29, 2021 regarding the impact of the COVID-19 pandemic on our operations, including those discussed above, and is highly dependent on numerous factors that we may not be able to predict or control, including: the duration and scope of the pandemic, including any recurrence; actions taken by governments, businesses, and individuals in response to the pandemic; the impact of the pandemic on global and regional economies and economic activity, workforce staffing and productivity, and our significant and continuing spending on employee safety measures; our ability to continue operations in affected areas; and consumer demand and spending patterns, as well as the effects on suppliers, creditors, and third-party sellers, all of which are uncertain. This guidance also assumes the impacts on consumer demand and spending patterns, including impacts due to concerns over the current economic outlook, will be in line with those experienced during the second quarter of 2021 to date, and the additional assumptions set forth below. However, it is not possible to determine the ultimate impact on our operations for the second quarter of 2021, or whether other currently unanticipated direct or indirect consequences of the pandemic are reasonably likely to materially affect our operations.
Second Quarter 2021 Guidance
- There are now more than 200 million paid Prime members worldwide. Members have exclusive access to deals every day and especially during Prime Day, which will take place later in the second quarter. • Amazon continues to innovate and invest in fast, free, and convenient delivery for customers. In the U.S., Same-Day Delivery in as fast as five hours is free on orders over $35 on over three million items in select cities. This is in addition to Free Same-Day Delivery on millions of items in thousands of cities and towns across 47 major U.S. metro areas, plus over 10 million items available for Free One-Day Delivery coast to coast. These fast and efficient deliveries are powered by Amazon’s last mile network of delivery driver partners—small businesses creating tens of thousands of new jobs across the country.
- Amazon continues to expand Amazon Scout, a fully electric autonomous delivery system. Similar in size to a small cooler on wheels, Amazon Scout rolls down the sidewalk at walking pace and delivers items right to customers. Since its launch, Scout has delivered tens of thousands of packages to customers in California, Georgia, Tennessee, and Washington, and the program is continuing to expand to new communities in the U.S.
- The new Prime prescription savings benefit offers pharmacy savings at more than 60,000 participating pharmacies in the U.S., including Amazon Pharmacy. Amazon has helped Prime members save millions of dollars on prescription medications so far this year when paying without insurance, both at Amazon Pharmacy and other local pharmacies.
- Amazon expanded Discover Rooms, an immersive shopping experience that helps customers browse and shop from thousands of home room designs and instantly discover home furnishing product inspiration based on visual attributes. The experience is now available in nine countries, including Canada, France, Germany, India, Italy, Japan, Spain, UK, and the U.S.
- Prime Wardrobe, Amazon’s “try before you buy” offering, expanded selection and launched new innovations for customers, including the ability to chat live with Amazon Stylists for personalized recommendations and trial items recommended by their favorite fashion influencers and websites.
- In the U.S., Amazon launched an expanded assortment of NFL merchandise, including replica jerseys and hats, at amazon.com/NFL. Customers can now shop thousands of additional products on Amazon from NFL Pro Line, Fanatics, New Era, Outerstuff, '47, and other top brands. Amazon also made enhancements to the sports fan shopping experience, including improved navigation in Your Fanshop and personalized game celebrations for customers’ favorite teams.
- Amazon’s Counterfeit Crimes Unit continues to work aggressively with law enforcement, industry associations, brand owners, and academics to bring counterfeit to zero. Examples this quarter include working with the U.S. National Intellectual Property Rights Coordination Center to prevent counterfeit Super Bowl LV merchandise from reaching consumers and partnering with Pennsylvania-based, family-owned card game maker Dutch Blitz and Italian luxury brand Salvatore Ferragamo to file lawsuits against multiple counterfeiters and hold them accountable to the fullest extent of the law.
- In March, Amazon launched Amazon.pl, offering Polish customers a selection of more than 100 million products across more than 30 categories, including products from thousands of European and local Polish businesses. Amazon has been operating in Poland since 2014, has created over 18,000 permanent jobs, and will open its tenth fulfillment center in Swiebodzin in 2021, adding more than 1,000 new jobs to Amazon’s existing network in Poland.
- Amazon opened its first international physical retail stores powered by Just Walk Out technology with the launch of three Amazon Fresh locations in London. These new convenience grocery stores sell a range of products, including the new “by Amazon” private brand, and enable shoppers to enter a store, grab what they want, and leave without stopping to check out. There are now 15 Amazon Fresh physical stores around the world. • Amazon Fresh grocery stores expanded into four new communities in the U.S.: Oak Lawn, Illinois; Bloomingdale, Illinois; Fullerton, California; and Long Beach, California, creating hundreds of regular full- and part-time jobs in each community with starting wages of at least $15 per hour and comprehensive benefits.
- • Amazon announced that millions of Prime members now have access to Key In-Garage Grocery Delivery in more than 5,000 cities and towns in the U.S., enabling them to enjoy free, contactless, and secure in-garage delivery of grocery orders from Whole Foods Market and Amazon Fresh.
- • Amazon One—a fast, convenient, contactless way for people to use their palm to enter, identify, and pay—launched as a payment option at Whole Foods Market, starting with the Madison Broadway store in Seattle. Amazon One will be added as a payment option at additional Whole Foods Market stores in the Seattle area in the coming months. • Delaware North, a global leader in hospitality and food service, announced the opening of two checkout-free convenience stores using Amazon’s Just Walk Out technology at TD Garden, an entertainment venue in Boston and home of the Boston Celtics and Boston Bruins.
- • Amazon Business, the company’s global procurement solution, now serves more than five million businesses and generated $25 billion in worldwide annualized sales. More than half of unit sales are from third-party sellers, such as women-, minority-, or veteran-owned businesses that have been certified by U.S. diversity-certifying organizations such as the Department of Veterans Affairs and Women’s Business Enterprise National Council. In the U.S., Amazon Business serves 45 states and 80 of the Fortune 100 companies, including Citigroup, Intel, Cisco, and ExxonMobil.
- Amazon continues to expand its air cargo network to meet growing customer demand. In January, the company announced the purchase of 11 aircraft from Delta and WestJet to expand its Amazon Air fleet to more than 85 aircraft by the end of 2022. Amazon also announced new Amazon Air sites in Toledo, Ohio and Fairbanks, Alaska, and plans to expand existing operations in Canada this summer
Financial Guidance
The following forward-looking statements reflect Amazon.com’s expectations as of April 29, 2021, and are subject to substantial uncertainty. Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic conditions and customer spending, world events, the rate of growth of the Internet, online commerce, and cloud services, and the various factors detailed below. This guidance reflects our estimates as of April 29, 2021 regarding the impact of the COVID-19 pandemic on our operations, including those discussed above, and is highly dependent on numerous factors that we may not be able to predict or control, including: the duration and scope of the pandemic, including any recurrence; actions taken by governments, businesses, and individuals in response to the pandemic; the impact of the pandemic on global and regional economies and economic activity, workforce staffing and productivity, and our significant and continuing spending on employee safety measures; our ability to continue operations in affected areas; and consumer demand and spending patterns, as well as the effects on suppliers, creditors, and third-party sellers, all of which are uncertain. This guidance also assumes the impacts on consumer demand and spending patterns, including impacts due to concerns over the current economic outlook, will be in line with those experienced during the second quarter of 2021 to date, and the additional assumptions set forth below. However, it is not possible to determine the ultimate impact on our operations for the second quarter of 2021, or whether other currently unanticipated direct or indirect consequences of the pandemic are reasonably likely to materially affect our operations.
Second Quarter 2021 Guidance
- Net sales are expected to be between $110.0 billion and $116.0 billion, or to grow between 24% and 30% compared with second quarter 2020. This guidance anticipates a favorable impact of approximately 200 basis points from foreign exchange rates.
- Operating income is expected to be between $4.5 billion and $8.0 billion, compared with $5.8 billion in second quarter 2020. This guidance assumes approximately $1.5 billion of costs related to COVID-19.
- This guidance assumes that Prime Day occurs in second quarter 2021.
- This guidance assumes, among other things, that no additional business acquisitions, investments, restructurings, or legal settlements are concluded.
Amazon (AMZN) stock price chart over the last 5 years
The image below shows the stock price history of Amazon (NASDAQ: AMZN) over the last 5 years. And it's been a amazing time for Amazon (AMZN). Over the last 5 years the stock of Amazon has increased by 390% over the last 5 years. Thats returns NO investor would say no to
The stock of Amazon is trading at a closer to its 52 week high than it is to its 52 week low which is a clear indication that the short sentiment and momentum of Amazon is very positive.
The stock of Amazon is trading at a closer to its 52 week high than it is to its 52 week low which is a clear indication that the short sentiment and momentum of Amazon is very positive.
Amazon (AMZN) stock vs Walmart (WMT) stock over the last 5 years
The image below shows the stock price performance of Amazon (AMZN) and Walmart (WMT) over the last 5 years. One a massive bricks and mortar retail shopping chain, the other the world's largest online retailers. The image shows that the stock price trends looks fairly similar, but thats due to the fact that the scaling of the two charts are totally different. Below the stock price returns provided by Amazon and Walmart over the last 5 years:
The online retailer Amazon has easily outperformed the bricks and mortar retailers, Walmart over the last 5 years
- Amazon: 390%
- Walmart: 97%
The online retailer Amazon has easily outperformed the bricks and mortar retailers, Walmart over the last 5 years
Amazon (AMZN) latest stock valuation
So based on the 1st quarter 2021 earnings report of Amazon (AMZN) what do we value Amazon (AMZN) stock at? Based on their latest earnings report our valuation models provide a target price (full value price) for Amazon stock at $1860.90 a stock (down from our 4th quarter 2020 earnings valuation of Amazon). We therefore believe the stock of Amazon is overvalued.
We usually advise investors to look to enter a stock at least 10% below our target price (full value price) which in this case is $1860.90. So a good entry point into Amazon would be around $1674.7
We expect the stock price of Amazon to pull back to levels closer to our target price (full value price) in coming weeks and months and since its trading at well above our suggested target price or entry price we rate the stock of Amazon as a SELL
We usually advise investors to look to enter a stock at least 10% below our target price (full value price) which in this case is $1860.90. So a good entry point into Amazon would be around $1674.7
We expect the stock price of Amazon to pull back to levels closer to our target price (full value price) in coming weeks and months and since its trading at well above our suggested target price or entry price we rate the stock of Amazon as a SELL
Next earnings release of Amazon (AMZN)
It is expected that Amazon (AMZN) will release their 1st quarter 2021 earnings report in late April 2021