AMZN

My last post focused on Sears, Where America Shops. Today, I want to focus on the other side of the equation - Amazon, Where America (The World?) REALLY Shops.

First, a quick history lesson. Amazon was founded by Jeff Bezos in 1994. Fun fact, Sears published it final catalog in 1993!

Amazon started out selling only books but by the early part of THIS century they branched out into to anything and EVERYTHING. Recently they purchased Whole Foods for $13+Billion. A brick and mortar grocery. Perhaps we can explore that a bit later.

AMZN went public in 1997. They didn't actually show any sort of profit until 2001 and at that point, it was a penny a share. But they survived the Dot-Com implosion (probably by hoarding their cash) and began to thrive after many of their competitors had cratered.

Below is AMZN chart since IPO -


If you have ever been to a pitch meeting where a company is trying raise capital, you've seen this chart before. It is affectionately known as a HOCKEY STICK. Except this one is real!

Ordinarily, earnings drive stock prices. Earn more money, the stock goes up. The internet bubble of 2000ish was fueled by SPECULATION which is why it ended badly. AMZN is in an interesting case in that earnings have been fair to middling yet the stock has had a meteoric rise.

It would be easy to ascribe this ascent to said speculation. But I think it has more to do with Amazon's (unstated) philosophy - conquer the world! I have a friend who works for Amazon who said in all seriousness that 'Bezos can turn on the earnings engine anytime he wants, he just chooses not to'.

Such a statement makes sense if the assumption is that all available profits go back into building the beast. Which may very well be the case especially when said cash is used to swallow companies whole - Whole Foods anyone? Sorry, couldn't help myself...

Next time, I will try to connect some of the dots between the aged beast (SHLD) and the new-kid-on-the-block...



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