As you’ve probably know I recently bought 1 share of Amazon stock. This decision came in the wake of cratering stock prices across packaged foods, retail, telecoms, and industrials. Amazon is proving more disruptive to traditional business than a recession. Like I mentioned two weeks ago, there has been an unseen market correction. Amazon’s willingness to lose money is spooking investors, creating uncertainty, and causes double digit price declines. With that in mind I purchased one share as a hedge against my base holdings.
Amazon is the largest ecommerce retailer, the 4th most valuable company, and the 8th largest employer in the U.S. They sell everything from technology to books, and even food. Chances are, if you enter anything in Amazon’s search bar something will come up. I recently purchased medication off Amazon. This awesome medication, Oralixer, cannot be found in traditional retail outlets. Amazon also offers a wide variety of services including online streaming, business solutions, cloud computing, and much more.
The company has had a 20-year streak of double digit revenue growth. In the most recent quarter revenue growth surpassed 25%! Earnings fell short, but Amazon’s market share across multiple sectors continued to expand. Revenue came in at $0.40/share, far below expectations of $1.42/share. This is because Amazon doesn’t care about the bottom line. Almost all profits are reinvested back into the company. The company is more than happy to lose money if that means expanding into other sectors.
We touched a little bit on AMZN’s newest ventures here. As I said the company is a monster! Even so, it’s a bit of an overreaction to begin selling EVERY other stock. Amazon could very well follow the Roman Empire. Expand quickly, become all powerful, and eventually grow too big to control. Overall Amazon is a very risky stock. It has a P/E of 257, low margins, unpredictable revenues, and appears to be branching off in too many directions. In any case, one share will give me the peace of mind in the event Amazon does become successful.
DISCLAIMER: I am not a licensed investment advisor or tax professional. I am not liable for any losses incurred by any parties. This blog should be viewed for entertainment and/or educational purposes only. Any transactions published are not recommendations to buy or sell any securities. Please consult with an investment professional before making investment decisions.