Amazon is Primed. It’s fabulous really.
Do You love it?
Prime Day 2017 shattered every record and wired Amazon even deeper into the habits and homes of America. We’ll be talking to “dots” from now on. “The Echo was not only the best-selling Amazon device this Prime Day, but also the best-selling product from any manufacturer in any category across Amazon globally.”–Amazon.
Amazon is a dream, shimmering in the early dawn. Amazon brings us things that transfAorm us. It shows us things we’ve never beheld. Amazon entertains, soothes, delivers, delights, and disrupts. Amazon awes all with a wingspan arched into a stunning global embrace. Amazon stock is also bronco-bucking toward $1000.oo bucks a share and beyond. Last week we watched shares top $918.00 midday. Amazon remains the real deal.
Amazon is primed. It will–barring unforeseen events–grow with slack-jaw intensity for years. Yet, that’s not news to those paying any attention, to what is a crown-jewel phenom in market history. Here’s the news; investors will be best served by not, or learning to not, love Amazon. And they do love it–even in stone denial. They coo to themselves at night about it. They feel it there, just there, close by, especially in the dark. It’s all warm and snugly. Watch their faces when the mane is uttered.
Amazon may feel like a family member, yet in reality it’s much more a magnificent unfolding experiment. Think about it. It can’t be measured by traditional metrics, like my friend and yours–the P/E ratio. They earn when they want to, and the market pups up to that nodding and wagging. Correct. The world-dominating Dr. No intent to “Sell everything to everybody” sets them apart as well. We might also point at the neck-snapping revenue growth of AWS. Count MLB and the White House among their customers. That’s freakin’ awesome.
Amazon is a monstrous T-Rex stomping the planet with eyes geeked for new fulfillment center sites. And in his eyes you can just barely make out a tiny Jeff Bezos behind the controls. “It’s only me” Jeff nods. Que guitars, as we watch this company do just what it says.
By respecting Amazon, as one would a mining truck, we will be rewarded, not road kill. Do not fall in love with, or become bewitched by, the spectacular show that is Amazon. Love brings blind spots, and blindness often equals ignorance, and ignorance never ends well.
Amazon is a stock and all stocks eventually tick like time bombs.
As astute shopping customers we are routinely exposed to many useful insights that together define companies. As intrigued researching investors we learn, or can if we’re interested, learn the business side of companies. That is in large part exactly what StockJaw is about. Evidence lies all around us. All we need to do is pick it up and piece it together. The two distinct perspectives or consumer and equity investor are not compatible. As an investor, I will eventually leave Amazon. It will happen. Loving Amazon blinds me to the company’s flaws, and future slowing.
Every week we see, or hear, Amazon is launching yet another venture, or radically expanding existing efforts; the new Amazon Go, Amazon Fresh in more cities, Amazon Now serving more customers and faster, Amazon Prime going monthly, and any way you what it. Want just video and music for the month, $10, add 2-Day shipping for the month for just $2 bucks more. Every time my smiling Amazon box plops onto the front porch I’m thrilled. When I learn FY2016 (full year) Amazon Prime grew by 32%, I’m thrilled. Yet these are very different realities.
Love as a customer can complicate leaving as an investor.
The myopic gauze of loving often prevents proper and timely identification of facts we don’t like. Every company harbors ugly truths. Eventually, those ugly truths will be bad news, like shrinking margins, bloated inventory, or mismanagement. At a point in our future, Amazon will display all the signs of a company slowing, maturing, and slipping from super growth to a stalwart. Institutional money will leave, probably slowly. Price performance will greatly moderate. Every growth story ends, and sometimes brutally. Some once-vibrant stocks and companies simply become sleepy, like IBM. Nothing sudden or traumatic occurs. Growth just slows. Or we could see an Enron, Worldcom bottle-rocket end. That won’t be Amazon’s path.
Amazon will grow for years, almost assuredly with neck-snapping bursts. Yet, ends come when they do, in their time, not ours. Ends come for love stories and growth stories. Since we don’t know precisely when ends come, we are called to watch. What we’re looking for in the case of Amazon remains unclear, we keep looking–think margin contraction. Look for the signs. Signs always precede big slowdowns, or meltdowns–oops, not really. Occasionally ends come on pristine and silent cat feet, while all sleep, except us.
Images sourced from Pixabay.