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Why Amazon Is Crashing: Jeff Bezos' Nightmare Quarters In Charts
The only six charts you need to know why the Amazon dream is over and why AMZN stock is currently crashing after hours to fresh 52 week lows.
Total employees and global sales growth:
Quarterly Operating and Net Income
Operating Margin: whoosh
LTM Operating Margin: at 0.1% it is pretty much the lowest ever.
Q3 over time for profit and net income
And for operating margin
and the result so far...
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Many sellers are on both AMZN & EBAY.
I must say i've had great service from Chinese suppliers. Except 1 & that was quickly remedied.
I love Amazon (as a shopper, not investor). I could drive an hour to Costco or an hour and a half to Wal-Mart, shop with the knuckle-draggers and mouth-breathers, and still not find what I need. OR, I can find whatever I'm looking for on Amazon and have it sent to me. I love that.
That being said, their stock price is inexplicable.
"On a long enough time line..."'Nuff said?
Coulda seen THIS coming...The guy runs a consumer merchandise business, and his "big idea" is to have drones deliver all the stuff no one is buying because the economy is in the toilet. It's like he was off the planet for a few years, and just blew back into town, has NO IDEA what's been going on..."What! A recession? You're kidding me! When did THAT start?" Complete and total disconnect. That's what you get when CEO's turn "professional". When they switch over from being the founders and leaders of their companies, and become the tool of shareholders instead.
Which is something else I don't get. It seems to me to be a conflict of interest when CEO's act in the interests of shareholders at the expense of the company itself. I know about the notion of fiduciary responsibility to those investors, but that should refer to their principle being protected as much as possible, not some guarantee of future profits on that principle. But when these shareholders go so far as to demand a company cannibalize itself through buybacks to "return value" to those investors, it seems to me that a CEO has an obligation to put them in their place. Do CEO's have no legal obligation to the COMPANIES they run? To the employees who depend for their livelihoods on that company staying solvent and functioning? Those employees have also invested in the company, their time, their talents, etc.
Funny, if those workers were to demand pay raises or something like that, the shareholders would scream at being 'shorted'. Yet they do not see themselves as 'shorting' those other investors, the workers, by demanding the same amount of money be given to THEM instead. Why not a raise for workers and a smaller dividend payout to shareholders?
Maybe it would be better if ALL with an interest in the company share in the profits, and if the priority went back to improving the business for the long term.
You are 100% correct. Many CEOs are over paid, over educated employees. They work mostly for the shareholders.
Anyone who has owned a company with employees (such as myself) is there from the time it is born, grows and we suffer through it if it dies.
The company and employees always comes first in my eyes. Without employees nothing gets accomplished. If there are investors or shareholders and the company does well they benefit by recieving dividends and their investment grows in value. They own a piece of something. The risk to them is losing an investment.
Cherry Picker, I can tell you haven't read much Ayn Rand.
/big huge SARC
+1
After seeing other articles on companies on here, it's just called Join the Party!
When I went to business school (taught the Austrian school of economics, thankfully) it was known as being loyal to your stakeholders (employees, community, etc.) as well as to your shareholders.
All people in San Fran are like this.. they just are in the clouds
Seriously how do I insert a picture in the comments section?
You can't, only a select few contributors can put pictures in the comment section.
Put it on Flickr and post a URL...
Those trends look like CNBC's ratings.
This fat piggy piece of shit is THE poster child for POMO. It's long been on the list at the Fed prop desk labeled "Too Critical to Market Hopium and Unicorn Dreams" and received a constant bid under it accordingly. I'd love to see this pile of horseshit go to $0.00.
I moved quite a bit of purchasing off Amazon when they decided to charge sales tax and upped the minimum purchase for free shipping. Suddenly, other sites became better bargains.
Very interesting. Companies offering cheap service - Walmart, Amazon, McD, Netflix are suffering huge declines. Even big companies like IBM fall in double digits in a single day. Yet the broad ETF's bounce back as if nothing happened. Very very curious.
The market is pointing to total exhaustion of consumer capital. Where does liquidity come from and where does it flow to levitate the stocks?
The source is obviously the Fed - the buyer of last resort when it comes to everything, but where do they inject money? Looks like they're pumping the banks and the ETF's themselves. BTFD means: "It would look suspicious if we went straight for the failures, so take the magic dust we're putting into your penny stocks and use it to rebalance portfolios in favor of troubled institutions... or more specifically, the underwriters."
Reminds me of pachinko prize conversion in Japan. Gambling for money is illegal, yet having an intermediary item and a middle-man vendor exchanging it for cash is perfectly fine.
When it comes to market, the process is handled by algos, so it is possible to execute billions worth of transactions without waiting for the consent-based sentiment to form. The Fed injects money into placeholders and the algos then reshuffle the funds towards actual designated targets. An interventnion doesn't look like an intervention, but a mere act of rebalancing (which is bullshit).
So, another major company joins the ranks of decliners. Market's reaction?
Tis but a scratch!
They bought a bunch of real estate in downtown Seattle and built a bunch of buildings. I heard that it might have been a billion dollar investment. They bring their pets to work. They bought a robotics firm and are building millio SF distribution centers across the country. My sense is that they think they are as smart and cool as the Microsoft people. I have spent time in both environments, and don't think that Amazon "is all that".
But life in their vast warehouses is a horror show - unhealthy, strenuous, dangerous work under remorseless pressure.
You laugh but even now his Amazon hordes are seizing the capitol!
Why didn't Bezos manipulate his numbers? I don't get it.
Oh....
Wait....
Now that Scamazon has destroyed most brick-and-mortar businesses by selling at a loss (via investor funding of the scheme over the last 18 years), it seems Bezos finally has figured out a way to buy back most of the stock, leaving himself owning most of the company; that allows him to take it private, then raise prices across the board. Amazon was the first of the great internet scam, and it has been successful like nothing else in the history of criminal finance at printing paper to use as a mechanism of theft, in the form of stealing the business of legitimate companies. The Federal Reserve is a hacker in comparison when it comes to printing paper and using it to accumulate real property and the good-will of real companies.
When there is nothing left to plunder from the plebes, they will take all the profitable companies private--and in the case of Amazon, surreptiously and after-the-plunder profitable...
what do you mean "raise price"? have been to their web-site recently? fucking $9 for a 16oz of peanuts?
Him getting involved in gay marriage and adding sales tax to Florida orders killed my interest in ordering.
Amen Brother.. Vote with your dollar... only thing that is left.
The first chart is comparing total number of employees with y/y change in total sales. If you compare changes for both numbers they should be in line.
Well. The economy is total shit thanks to the bankers. I am not going to run up and kick AMZN in the junk for smelling as bad as everyone else. This is as much an economic story as anything else. Everyone overtly sucks or lies about it. And the Fed + Treasury just keep buying the markets because the alternative is reality.
Getting closer to the price I advised it was worth two years ago. I will buy it at 45.
i bought it at 90 pre-crash and sold it at 65 thinking there is no way this company would be allowed to take a silly valuation for so long.
Wake me up when its in the 50's.
Their workers were suing to be paid for the time it takes to exit one of their 1.3M SF sort/distribution centers. It seems thft has been an issue and they need to search everyone leaving at the end of the shift.
Most retail stores search employees when they leave at the end of a shift.
That is interesting. I did not know that. However, most retail stores don't have 800 people trying to leave at once through 1 check point.
I don't mean strip search, LOL. Just a quick look into a purse or backpack on the way out. Some stores require a see-through purse for women.
You make a good point about Amazon's size, however.
look at off balance sheet lease additions. This company is setting new bars for the term "capital intensive business".
The banks are in the process of moving all their junks into their 30-50 year *new* funds they came out with. They will buy AMZN enough to limit the option put losses and then slowly move over this junk stock onto people's 401K's.
Sounds like something GS would do.
b...but I thought they would make up for their losses on every sale by doing so much volume?
I am one of the bizarre I grew on the WEB back when it was bulletin boards everything went through a proxy sever and you had to know D.O.S.
I probably have bought 6 or 7 things online my entire life. I don't get online shopping, good for researching products though.
I remember when Amazon started everyone was totally hyped I thought really? who the fuck would buy something online. apparently a lot
I had been shorting this for 2 years and got sick of the stock going up despite terrible earnings. Even with this news the shorts will somehow get killed.
Amazon dot bomb. I can't believe it's survived. Lots of great ideas don't make money. How this one made it this far is surprising to me.
The [false] idea they can undercut market prices, take loses, and customers would eventually be loyal and buy at market prices or higher. You'd have to be an idiot to believe that idea.
I guess some wild speculation about their drones, cloud business, etc, too. Some of that stuff could reduce overhead and shipping costs, but in general people fell in love with a dream here. Clear short that might finally tank. I've personally been burned trying to short it so good luck to others.
anyone can compare similar "unexpected losses" and market
reaction? 11% down seems like very little.
in a free market, amazon should be down 25% or more
Amazon is 20 years old(!) and I've been puchasing stuff there for 20 years. Great cheap service = no profits. ever.
when will the last fool get it? when sales are 30% of WMT? 50%? 66%?
McDonalds, Walmart, Coca Cola and now Amazon. Consumer stocks are looking bad.
Do you think the average consumer is finally all tapped out?
I hope you all have a very merry Christmas this year!
sarc.
Exactly... But the S&P is over 1900 again... whos doing well enough to justify the index... and remember USA unemployment is 5.9%
AHAHAHAHAHAHAHAHAHHAHAHAHAHAHAHAHAHAHAHAAH... Turn up your speakers... HAHAHAHAHAHAHAHAHAHAHAHA
Mister Softy did OK so no one will remember Amazon when the morning levitation time comes.
Amazon. The Evil.
It's a glorified monopoly.
And you know that ain't a joke.
It is hard to see why Amazon has any fans when you consider how they abuse and exploit the brick and mortar stores that line streets throughout America. These are the stores that employ our family members, support little league teams in the community, and add value to our lives. These stores build or lease space, buy supplies from the other local businesses, and pay both sales and real-estate taxes. Amazon is not our friend!
Brick and Mortar is also massively overbuilt. Amzn (and newegg and others like it) are the catalyst to spark the much needed reduction in retail sq.ft/person that is sorely needed in this country.
But Alibaba makes tons of money Right?
At least respect them for hiring.
Drones, man! Drones! It's brilliant!
That first chart is priceless...
Words like "evolving" are used to describe Amazon's business model, a better word might be undefined. Regardless Amazon rolls on. Pointing towards gaining synergy as they continue to buy companies, some unproven. The revenues from these companies add to their growth but still no profits exist. Does this growth mask a weakness at their core? If they are indeed a distribution company their stock should be trading at around 18 times earnings.
When you look for a P/E ratio on Amazon you find NA because the company makes no money. Another key weakness is that new competition can now cheaply and easily replicate the most profitable parts of Amazon and cherry pick much of their future potential. The bigger they are, the harder they fall, it is only a question of time. More on the subject of Amazon in the article below;
http://brucewilds.blogspot.com/2013/10/amazon-not-answer.html
Bezos seems to be up the Amazon without a paddle.
one word, newegg.
Look out amazon.
They even have a "straight from asia" section. Shipped directly to you from china.
Need moar robots
Amazonians aren't that sexy any more with sales tax.
But it was cool while it lasted.
Was it good for you ?
I think so.
Another thing going forward, if this Ebola thing takes off...then mail delivery may be precious in some cities and suburbs...just stay in he house.
Time for Bezathon to issue (more?) bonds for stock buybacks ?
Because it also needs cheap QE money
This is not Bezos' nightmare, it's his policy. Anyone who follows Bezos knows that he is not into making profits, he's into expansion. And he did well, very well.
Stocks are barbaric relics that no longer fi in today's world. After the next crash the stockmarket will be done for good, but the economy will be fine. Welcome to a new reality.
Amazon continues to be the place to go for books, DVD's, and small items. I love it when people say Amazon kills small businesses. I am a small mom and pop and use the savings of not being bricks and mortar to fight back against the big box retailers. The same is true of eBay to a lesser extent. Amazon should be able to make more more, but they keep expanding. At some point, they will pay for more of that expansion and their profits should go up.
While all of these metrics are bad, the one that jumped out to me is forecasted holiday growth is lower than expected.
Which isn't an amzn only thing but will kill physical retailers more.
And this is after the morons on tv were talking about average consumer retail dollars spent in the holidays will be greatly higher.