Another AMZN

 

AMZN crashed around 12% today

due to its earnings report

But 1 bought 1 more

mainly due to Adam Khoo

he really loved this opportunity

I will paste what he said on youtube community

Wow! Great to see so many responses to my question. Well, here is my answer. If I had to put my entire net worth into 1 stock, I would choose a business that… A) Has dominant leadership (wide economic moat) in more than one industry (diversification) B) Recurring revenue streams C) High growth and defensive at the same time D) In industries that are in long term secular growth trends E) Undervalued F) Brand monopoly + high switching costs + economies of scale + network effect And the answer is …. Amazon (AMZN) AMZN is actually made up of 5 major dominant businesses 1) Ecommerce Business (Amazon Prime) Accounts for 41.4% of all US e-commerce spending (AMZN retail + AMZN market place) 200 million prime members each paying $14.99 monthly (versus 111 Costco members, 32 million Walmart+ members) Brand monopoly + economies of scale + network effect 2) AWS Cloud Infrastructure Business Leading 33% market share of cloud infrastructure (vs Microsoft 21%, Google cloud 10%) Utility like defensive business with extremely high switching costs Even major competitors in the streaming service like NFLX, HBO and DIS have to run their services on AWS Infrastructure . They power over 33% of all companies that run online. Even CRM and ADBE run on AWS infrastructure. 3) Advertising Business Amazon’s advertising business ($31 billion annually) is even larger than YouTube’s ad business ($28.85 billion annually) and bigger than Twitter and Snapchat entire revenues. 4) Streaming (Prime video membership) Business 200 million Prime video members (versus Netflix 222m, Disneyplus 129.8 million) With AMZN’s acquisition of MGM studios, their content will easily rival NFLX and DIS 5) Amazon Prime Delivery and “Buy with Prime” (Distribution and logistics ) Amazon just launched a new service, “Buy with Prime”, that lets 3rd party online merchants to use its shipping and logistics network to fulfil orders on their own sites, while also appealing to Amazon’s 200 million-plus Prime customers.These web sites will be able to put the Prime badge on their websites next to items that are eligible for free two-day or next-day delivery. Amazon will earn fees for payment processing, fulfilment (delivery), storage and other fees. This could be a killer for Shopify, Ebay UPS and Fedex’s business. Amazon is on track to become the nation’s largest delivery service by early 2022, potentially surpassing Fedex and UPS eventually So essentially, when you buy AMZN, you are buying 5 great business for the price of 1. Is Amazon Expensive? Many investors think that AMZN is expensive because of the high P/E of 43x and recent negative Free Cash flow. What they don’t understand is that AMZN has been intentionally spending insane amount in Capex recently ($61 billion)on building infrastructure and distribution centres to further strengthen their moat and kill competitors. In 1 year alone (2021), they added 150 million sq ft of distribution centre space (more than the whole of Walmart). And they are adding the same additional amount this year. Once they stop their high Capex spending, their Free Cash Flow will easily double and Net income will double as well, and their P/E will come down to 20x, which is more reflective of their actual price to earnings ratio. At an earnings growth of 20% to 35%, its PEG ratio is essentially 1 or less. My discounted free cash flow calculation based on normalised free cash flow will give the shares an intrinsic value of $3,600 (conservatively).

I also did not want to have 40 shares after the split

if I have 3 AMZN, I will have 60

this purchase costed me another S$3.5k

I withdrew 20.5k from my POEMS account

currently left around 55k

with this AMZN purchase, I have spent total of S$16.5k these few days

I have another S$3.5k to spent

before I still have another S$55k of cash left in POEMS

I might have to start thinking to save more bullets

what if TSLA crashes, and I need the cash to buffer my IG account

it this market correction goes into a bear market, it might have another 250 days (9 mths) before the market starts reversing