Displaying items by tag: Amazon
You may or may not have heard of Shopify, but if you haven’t, it is probably time to take a hard look. Shopify is a Canadian e-commerce company—a fact which has meant it has been somewhat overlooked by those outside the tech space—that makes offering ecommerce and in-store payment collection easier for small businesses. The idea is to offer the scale and robustness that large companies have to small businesses selling online. It makes its money from subscription fees and add-on services. After initially falling during the lockdown, it has nearly doubled in value and is now worth around $100 bn.
FINSUM: This has been a big run higher, but Shopify sits at the intersection of ecommerce and fintech and may be the long-term competitor to Amazon.
The stock market may be complicated right now, but some things are abundantly clear. One of those is how the retail sector, and retail stocks in general, are going to react to the crisis. The answer is that big players are going to continue to grow, largely at the expense of smaller retailers. Bigger companies, with sophisticated websites and massive free shipping operations, have been thriving as small companies falter.
FINSUM: Think Amazon and Walmart, maybe Shopify (see other story about Shopify from today), as these companies will be the ones winning orders from customers over the short and long-term.
Investors have made cash the only thing that matters in markets. The Dollar is surging and investors are fleeing assets in favor of cash. Cash is a scarce and valuable asset in this downturn, and which companies have a ton of it—tech companies. While the Silicon Valley giants will take a hit from lower consumer spending, the reality is that the shutdown of normal life is pushing things ever more online—their domain. As this crisis eventually abates, giants like Apple, Microsoft, Google, and Amazon, have huge cash reserves (currently $350 bn) that will help them attract shareholder capital, and also grab market share as competition gets weeded out.
FINSUM: Tech is probably going to be in a stronger position in a year than it was six weeks ago. Their fortress balance sheets will be key.
The golden age of streaming is over, that is for sure. For the last several years, the combination of Netflix and Amazon Prime have given consumers a wide array of choices at low prices. However, the streaming space is now fragmenting dramatically as Disney and others take their programming off Netflix and others, making consumers pay for more subscriptions to get the same content. NBC, for instance, just launched its own service, Peacock, for its content. However, it did something quite differently—a lot of the content is free for consumers. You only pay for a premium section of the content, but a bulk of its is free when you sign up. If you are already a Comcast subscriber, the whole thing is free, though it does have limited ads.
FINSUM: This is the first time that a major streaming service decided to be free (outside of Prime Video being free for Prime subscribers). This may change the whole pricing paradigm for the industry.
Yes, Amazon looks expensive and has seen massive gains in recent years. This makes many fearful of the stock. But the reality is that the stock is a free cash flow rocket ship that is going to keep surging higher, according to 47 of the 49 Wall Street analysts who cover it. Amazon trades for 69x 2020 earnings, but it still looks pretty inexpensive on a free cash flow basis. The company’s past growth initiatives are now paying off, which means Amazon is throwing off free cash flow in a big way.
FINSUM: Amazon has averaged a 35% gain per year since it went public. We don’t see any big reasons why it cannot continue this year.