1
00:00:00,100 --> 00:00:03,200
The last time Amazon had a 
decline like this, it dropped 80

2
00:00:03,200 --> 00:00:05,700
percent in 2000. 
In the people that bought did 

3
00:00:05,700 --> 00:00:08,100
pretty well, I would say for 
that trough. 

4
00:00:08,100 --> 00:00:11,500
Now, the question is, is it done
dropping its down about fifty 

5
00:00:11,500 --> 00:00:14,200
percent on the year? 
That is the question. 

6
00:00:14,400 --> 00:00:16,700
That's the question. 
Everyone's asking themselves as 

7
00:00:16,700 --> 00:00:19,300
of now, is Amazon. 
Finally done? 

8
00:00:19,300 --> 00:00:22,400
Dropping. 
We have articles now from CNBC 

9
00:00:22,400 --> 00:00:26,200
pointing out the Amazon has come
full circle, all the way back to

10
00:00:26,200 --> 00:00:28,100
the covid lows during the 
pandemic. 

11
00:00:28,100 --> 00:00:32,000
Amazon dropped all the way down 
to $84 per share and that was 

12
00:00:32,000 --> 00:00:34,900
considered a still. 
We're here, we are, we find 

13
00:00:34,900 --> 00:00:38,800
Amazon currently trading at 85 
dollars and fourteen cents and 

14
00:00:38,800 --> 00:00:41,300
it's dipped below that 84 dollar
Mark. 

15
00:00:41,300 --> 00:00:45,300
So now we have Amazon right back
to where it was and 2020. 

16
00:00:45,400 --> 00:00:47,900
It's made the loop like so many 
other companies. 

17
00:00:48,200 --> 00:00:49,800
But Amazon is a pretty unique 
company. 

18
00:00:49,900 --> 00:00:52,600
Amazon is a well-established 
Juggernaut of a company that 

19
00:00:52,600 --> 00:00:55,000
does 500 billion dollars in 
Revenue. 

20
00:00:55,200 --> 00:00:58,400
Half a trillion dollars in 
Revenue in one year in this 

21
00:00:58,400 --> 00:00:59,800
company's trading at the lowest 
point. 

22
00:01:00,000 --> 00:01:02,700
It has in years. 
So we know that Amazon is this 

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00:01:02,700 --> 00:01:06,100
vast complex company that can be
very difficult to understand 

24
00:01:06,100 --> 00:01:07,900
because it has a lot of moving 
Parts. 

25
00:01:08,100 --> 00:01:11,300
What I want to do is boil down 
this company into something 

26
00:01:11,300 --> 00:01:13,800
that's easier to understand. 
We're going to be looking over 

27
00:01:13,800 --> 00:01:17,100
the good of Amazon and the bad 
of Amazon and my predictions of 

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00:01:17,100 --> 00:01:19,300
where this company is headed in 
2023. 

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00:01:19,300 --> 00:01:21,500
So, I hope you'll get a better 
idea of where Amazon currently 

30
00:01:21,500 --> 00:01:24,100
is standing and what it's facing
in 2023. 

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00:01:24,200 --> 00:01:26,500
Now, before we jump into Amazon,
specifically, I have to do a 

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00:01:26,508 --> 00:01:29,000
quick portfolio update. 
This is real money. 

33
00:01:29,100 --> 00:01:32,300
The story fund is, A tech 
portfolio that I started in 2021

34
00:01:33,000 --> 00:01:35,700
like most tech portfolios. 
It hasn't done well this year. 

35
00:01:35,700 --> 00:01:38,000
So, when I look at the Holdings 
page here, this gives some 

36
00:01:38,000 --> 00:01:41,200
clarity into the situation. 
Basically, what I have here are 

37
00:01:41,200 --> 00:01:45,100
companies and I've waited them a
certain way or I put more money 

38
00:01:45,100 --> 00:01:48,000
into the companies that I have a
higher long-term conviction of 

39
00:01:48,000 --> 00:01:51,300
these businesses. 
So, my top Holdings right now, 

40
00:01:51,600 --> 00:01:53,900
the ones that I have, the 
highest level of confidence and 

41
00:01:53,900 --> 00:01:57,300
conviction are first. 
Amazon, the company in question 

42
00:01:57,300 --> 00:02:00,800
today and then Netflix, that 
one's a little Of a contrarian 

43
00:02:00,800 --> 00:02:03,600
pick, but I have a very 
long-term thesis on Netflix that

44
00:02:03,600 --> 00:02:05,400
I see playing out really well in
the future. 

45
00:02:05,900 --> 00:02:08,500
But we have Amazon here with the
majority of the money invested. 

46
00:02:08,500 --> 00:02:12,900
And this one is where I have 
lost or rather have unrealized 

47
00:02:12,900 --> 00:02:15,800
losses. 
Right now the most I'm twenty 

48
00:02:15,800 --> 00:02:18,500
one thousand seven hundred 
dollars in the red. 

49
00:02:18,800 --> 00:02:22,200
Now most of my losses in this 
portfolio which I'm currently 

50
00:02:22,200 --> 00:02:25,900
down 31%. 
Most of this is unrealised, in 

51
00:02:25,900 --> 00:02:28,900
fact, almost all of it is which 
means the companies have come 

52
00:02:28,900 --> 00:02:31,000
down in value. 
But I have not been selling out 

53
00:02:31,000 --> 00:02:33,300
of them. 
I've just kind of held onto him 

54
00:02:33,300 --> 00:02:36,600
and if my thesis plays out over 
the long term, and these 

55
00:02:36,600 --> 00:02:39,900
businesses do, well, I think the
price will recover so you can 

56
00:02:39,900 --> 00:02:43,400
consider this lost money as of 
now, but really, it's unrealized

57
00:02:43,400 --> 00:02:46,900
losses. 
Amazon is down, 21,000 Netflix 

58
00:02:46,900 --> 00:02:50,400
is down, 12,000, even Google is 
down, four thousand. 

59
00:02:50,400 --> 00:02:53,400
So it seems that really no 
companies being spared right 

60
00:02:53,400 --> 00:02:55,600
now. 
Even Apple is is getting close 

61
00:02:55,600 --> 00:02:58,400
to getting in the red, so there 
you have it, there's a 

62
00:02:58,400 --> 00:03:00,100
portfolio. 
If we look at it compared The 

63
00:03:00,100 --> 00:03:02,600
S&P 500. 
This is what it looks like here.

64
00:03:03,000 --> 00:03:06,100
The S&P 500 is in, read the 
story fun is in blue. 

65
00:03:06,100 --> 00:03:10,800
So you can see, I'm trailing it 
about the Same by around 20%. 

66
00:03:10,800 --> 00:03:15,000
So I'm lagging behind the S&P 
500, the goal is over the next 

67
00:03:15,000 --> 00:03:17,200
five years to hold on to these 
companies. 

68
00:03:17,400 --> 00:03:19,700
Hopefully, they'll do really 
well and I can have the 

69
00:03:20,000 --> 00:03:23,800
portfolio recover and surpassed 
the S&P 500 because I'm using 

70
00:03:23,800 --> 00:03:27,600
this, as The Benchmark, spy is 
incredibly difficult to beat. 

71
00:03:27,800 --> 00:03:30,400
It's something that a lot of fun
managers and Individual 

72
00:03:30,400 --> 00:03:33,200
investors struggle to be. 
So that's the challenge. 

73
00:03:33,200 --> 00:03:36,800
It's a very high bar to try to 
beat the S&P 500 right now. 

74
00:03:36,800 --> 00:03:40,000
We're a little bit behind, but I
do think we still have a chance.

75
00:03:40,100 --> 00:03:43,200
I really do. 
We're down 31% and I'm still 

76
00:03:43,200 --> 00:03:45,000
optimistic. 
I think we have a lot of time to

77
00:03:45,000 --> 00:03:46,900
be able to catch back up. 
So let's go ahead and take a 

78
00:03:46,908 --> 00:03:49,600
look at some of the news here 
and why people are discussing 

79
00:03:49,600 --> 00:03:51,900
Amazon again. 
And all of a sudden this company

80
00:03:51,900 --> 00:03:56,400
is in focus from investors, this
headline from CNBC paints, a 

81
00:03:56,408 --> 00:03:58,300
very clear picture of what's 
going on with Amazon. 

82
00:03:58,600 --> 00:04:02,100
The stock is given up the 
Estimates pandemic gains after 

83
00:04:02,100 --> 00:04:06,900
almost a 50% slump, and 2022, 
and that almost 50% slump. 

84
00:04:07,100 --> 00:04:12,000
It's 50% where they're so. 
This is the the full circle. 

85
00:04:12,300 --> 00:04:15,200
We went up around and right back
to where we started. 

86
00:04:15,200 --> 00:04:17,100
We've seen this with so many 
tech companies. 

87
00:04:17,399 --> 00:04:19,300
They're right back to their 
pandemic lows. 

88
00:04:19,399 --> 00:04:21,399
So that's the basic reason. 
Why a lot of investors are once 

89
00:04:21,399 --> 00:04:25,000
again, considering Amazon stock,
it hit this nice little landmark

90
00:04:25,000 --> 00:04:28,000
of the 2020 lows and that brings
it in the news again. 

91
00:04:28,400 --> 00:04:31,700
But what I think investors need 
to siddur is there's a lot of 

92
00:04:31,700 --> 00:04:35,600
concerns that I have about 
Amazon going into 2023 that. 

93
00:04:35,600 --> 00:04:38,700
I think some investors might 
blindly just buy the dip in 

94
00:04:38,700 --> 00:04:42,100
Amazon and they won't have the 
conviction to hold for another 

95
00:04:42,100 --> 00:04:45,100
year because I think this next 
year could be challenging. 

96
00:04:45,500 --> 00:04:48,800
And what I did was I spent some 
time and I wrote out what I 

97
00:04:48,800 --> 00:04:51,200
think are the bad parts of 
Amazon. 

98
00:04:51,200 --> 00:04:55,100
Right now, simply put the parts 
that drive investors away and 

99
00:04:55,100 --> 00:04:58,200
why I think this stock could 
continue to trade down lower. 

100
00:04:58,500 --> 00:05:02,300
We had the CNBC guy. 
Earlier say, will the stock go 

101
00:05:02,300 --> 00:05:03,700
lower? 
I think, yes. 

102
00:05:03,700 --> 00:05:06,300
I think there's a very good 
chance of that, and these are 

103
00:05:06,300 --> 00:05:09,900
the reasons why let's just start
off with number one here, High 

104
00:05:09,900 --> 00:05:12,400
P/E ratio. 
Let's take a look at Amazon 

105
00:05:12,400 --> 00:05:15,000
we're using qualtrics insights. 
This is a website that I 

106
00:05:15,300 --> 00:05:17,200
developed over the past couple 
of years and we're doing a lot 

107
00:05:17,200 --> 00:05:19,300
of improvements to it. 
You can try it out as part of 

108
00:05:19,308 --> 00:05:23,600
the patreon membership but we 
see here is that Amazon trades a

109
00:05:23,600 --> 00:05:28,600
day high P/E ratio, its trailing
P/E is 80, that's very high. 

110
00:05:28,900 --> 00:05:35,100
And then the Ford PE is 44 a 44?
Ford PE that makes basically 

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00:05:35,600 --> 00:05:39,000
every other company look cheap, 
it even makes companies like 

112
00:05:39,000 --> 00:05:42,300
Tesla look inexpensive, it makes
meta. 

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00:05:42,300 --> 00:05:47,000
And Google, look Dirt Cheap from
a P/E ratio, Amazon looks 

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00:05:47,200 --> 00:05:50,200
expensive. 
And right now we're in a market 

115
00:05:50,300 --> 00:05:52,100
that does not like expensive 
stocks. 

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00:05:52,400 --> 00:05:54,100
I don't know if you've gotten 
the memo but if you've been 

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00:05:54,100 --> 00:05:56,900
paying attention to investing at
all, any company that has 

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00:05:56,900 --> 00:06:01,300
anywhere near a 30 or 40 PE? 
Has not done well over the past 

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00:06:01,300 --> 00:06:05,100
year, just any of them named any
company with a high PE, it 

120
00:06:05,100 --> 00:06:09,100
likely hasn't done well. 
Number two, Amazon's free cash 

121
00:06:09,100 --> 00:06:12,600
flow has been - for two years 
straight now. 

122
00:06:13,100 --> 00:06:15,500
So you might be thinking, all 
right, we look at companies make

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00:06:15,500 --> 00:06:18,200
it look at the price to earnings
ratio, but that's not always the

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00:06:18,200 --> 00:06:20,700
best indicator of how much cash.
They're actually generating 

125
00:06:20,900 --> 00:06:23,000
because the earnings can be 
gamed a little bit. 

126
00:06:23,400 --> 00:06:25,200
But the cash flows, the free 
cash. 

127
00:06:25,200 --> 00:06:28,000
Flows are what you can look at? 
Well, Amazon's free cash flow 

128
00:06:28,000 --> 00:06:31,500
yield currently based off the 
Past year is minus three 

129
00:06:31,500 --> 00:06:33,600
percent. 
That doesn't look good. 

130
00:06:33,800 --> 00:06:36,700
When we look at the free cash 
flow chart here, this is the 

131
00:06:36,700 --> 00:06:38,800
free cash flow of Amazon. 
Since the very beginning of this

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00:06:38,800 --> 00:06:42,300
company, going all the way back 
to 97, it's almost always been 

133
00:06:42,300 --> 00:06:46,500
free cash flow positive except 
for the past two years starting 

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00:06:46,500 --> 00:06:51,300
off in 2021 if we cross to this 
territory, Amazon's free cash 

135
00:06:51,300 --> 00:06:55,400
flow is - both years so far - 
there's only one quarter where 

136
00:06:55,400 --> 00:06:58,300
they actually posted positive 
free cash flow out of the past, 

137
00:06:58,300 --> 00:07:01,900
eight quarters. 
This is Amazing investors are 

138
00:07:01,900 --> 00:07:04,800
not only looking at a company 
that has a high P/E ratio. 

139
00:07:05,000 --> 00:07:07,100
Now, they're looking at a 
company that has no free cash. 

140
00:07:07,100 --> 00:07:10,400
Flow number three, Amazon has 
slowing Revenue growth. 

141
00:07:10,700 --> 00:07:12,600
This is going to be one of the 
key things that investors are 

142
00:07:12,600 --> 00:07:15,900
looking at in 2023. 
One of the big concerns for a 

143
00:07:15,907 --> 00:07:19,000
company that trades at a high 
P/E ratio implied. 

144
00:07:19,000 --> 00:07:21,500
In those earnings as fast 
growth, that's what investors 

145
00:07:21,500 --> 00:07:23,200
want. 
They're willing to pay more for 

146
00:07:23,200 --> 00:07:25,200
a company. 
As long as there is an assumed 

147
00:07:25,200 --> 00:07:27,600
level of growth. 
That makes makes sense as long 

148
00:07:27,600 --> 00:07:29,600
as a company, is going to grow 
into that multiple. 

149
00:07:30,000 --> 00:07:33,500
With a 44 PE ratio and - free 
cash flow. 

150
00:07:33,800 --> 00:07:36,800
There's a lot of growth implied 
in the stock Amazon. 

151
00:07:37,100 --> 00:07:41,200
And what we're looking at right 
now is a company that has growth

152
00:07:41,200 --> 00:07:44,400
in question growth may be 
slowing over the next year. 

153
00:07:44,900 --> 00:07:47,500
We look at the revenue growth 
year over year and last year it 

154
00:07:47,500 --> 00:07:53,300
was 14.7% if you factor in 
currency, it's a little bit 

155
00:07:53,300 --> 00:07:57,600
better but that's been a head 
when for them, but overall 14.7%

156
00:07:58,000 --> 00:07:59,800
not terrible. 
In my opinion. 

157
00:07:59,900 --> 00:08:02,700
I don't think that's too bad but
it's not anything like how 

158
00:08:02,700 --> 00:08:05,500
they've been growing over the 
past decade and the past decade 

159
00:08:05,500 --> 00:08:09,600
Amazon is averaged a 25 percent 
Revenue, compound annual growth 

160
00:08:09,600 --> 00:08:13,900
rate 25% and it's been 
decelerate, mm, down to 14 and 

161
00:08:13,900 --> 00:08:16,700
15 percent. 
So growth is starting to slow 

162
00:08:16,700 --> 00:08:20,600
down, and in 2023 growth, is 
going to be a major question 

163
00:08:20,600 --> 00:08:22,200
mark. 
I think that if growth slows 

164
00:08:22,200 --> 00:08:25,800
down at all lower than analysts,
expectations, that could be very

165
00:08:25,800 --> 00:08:27,900
bad for this stock. 
So, so far, we have a company 

166
00:08:27,900 --> 00:08:31,800
with a high P/E ratio, two years
of - free cash flow potentially 

167
00:08:31,800 --> 00:08:34,500
slowing Revenue growth, which is
something investors are going to

168
00:08:34,500 --> 00:08:38,100
be paying attention to a lot and
then growing stock-based 

169
00:08:38,100 --> 00:08:40,799
compensation. 
This is another thing, that's a 

170
00:08:40,808 --> 00:08:45,000
growing problem for Amazon. 
The expenses of the company when

171
00:08:45,000 --> 00:08:47,900
we're looking at a company's 
free cash flow, it makes sense 

172
00:08:47,900 --> 00:08:50,300
to factor in the amount of 
stock-based compensation, the 

173
00:08:50,300 --> 00:08:53,000
company's paying because that's 
a real expense to pay that they 

174
00:08:53,000 --> 00:08:55,100
have to dilute the current 
shareholder base. 

175
00:08:55,500 --> 00:08:58,900
So when I toggle this toggle 
right here in the middle, it 

176
00:08:58,900 --> 00:09:02,400
brings up this Bar, which is a 
little purple. 

177
00:09:02,400 --> 00:09:05,100
Bluish bar here, that shows us 
the amount of stock-based 

178
00:09:05,100 --> 00:09:08,400
compensation that Amazon is 
doing quarter-over-quarter. 

179
00:09:08,400 --> 00:09:10,500
If I zoom in on this, we can 
make it a little bit clearer. 

180
00:09:10,900 --> 00:09:13,700
If you can see the trend here, 
the amount of stock-based 

181
00:09:13,700 --> 00:09:17,700
compensation is going up 
dramatically a really rapid pace

182
00:09:17,900 --> 00:09:20,300
and that's while the free cash 
flows are going down. 

183
00:09:20,600 --> 00:09:24,400
So we have expenses going up, we
have cash flows going down at 

184
00:09:24,400 --> 00:09:27,200
the same time. 
Obviously, this is not what 

185
00:09:27,200 --> 00:09:29,500
investors want to see. 
This is a number of things you 

186
00:09:29,500 --> 00:09:30,600
need. 
Seek to Amazon. 

187
00:09:30,600 --> 00:09:33,100
If these aren't problems that 
every company has, I can name a 

188
00:09:33,100 --> 00:09:35,900
lot of companies that have 
positive free, cash, flows, and 

189
00:09:35,900 --> 00:09:38,000
they don't pay much in 
stock-based compensation. 

190
00:09:38,400 --> 00:09:40,900
But Amazon is facing all of 
these issues at once. 

191
00:09:41,200 --> 00:09:45,000
And on top of that, Amazon is a 
tech company always thrown in 

192
00:09:45,000 --> 00:09:48,300
and the tech basket with the QQQ
and what our tech companies 

193
00:09:48,300 --> 00:09:51,500
facing right now, they're facing
a high interest rate 

194
00:09:51,500 --> 00:09:53,600
environment. 
This is another thing, that's a 

195
00:09:53,600 --> 00:09:56,600
real concern for Amazon. 
If we look at the federal funds 

196
00:09:56,600 --> 00:10:00,300
rate here, this illustrates 
this, I think the clearest We 

197
00:10:00,300 --> 00:10:03,800
have in 2016 federal funds rate 
going up. 

198
00:10:04,000 --> 00:10:06,300
Interest rates climbing a little
bit as the economy was doing, 

199
00:10:06,300 --> 00:10:08,000
okay? 
Then and then we get up to 

200
00:10:08,008 --> 00:10:12,000
around 2.4 percent over like a 
three-year period. 

201
00:10:12,000 --> 00:10:14,700
So it took three years to get 
interest rates up two and a half

202
00:10:14,700 --> 00:10:16,400
percent. 
And what does the FED been 

203
00:10:16,400 --> 00:10:19,600
doing? 
Look how steep this climb is one

204
00:10:19,600 --> 00:10:21,000
year. 
We have interest rates going 

205
00:10:21,000 --> 00:10:23,800
from 0 up to three point, seven,
eight percent. 

206
00:10:23,900 --> 00:10:26,100
Then the FED just said in their 
most recent meeting that they're

207
00:10:26,100 --> 00:10:28,100
not done interest, rates are 
going to keep going up. 

208
00:10:28,100 --> 00:10:31,100
So we have that major macro. 
I had one as well of higher 

209
00:10:31,100 --> 00:10:34,400
interest rates and potentially 
teetering into a recession next 

210
00:10:34,400 --> 00:10:37,000
year, which of course, Amazon is
a company that sells a lot of 

211
00:10:37,000 --> 00:10:39,400
stuff to Consumers. 
A recession would not be good 

212
00:10:39,400 --> 00:10:43,000
for Amazon, but overall, this is
a list of the bad things that 

213
00:10:43,000 --> 00:10:45,000
you should know about. 
If you're deciding to purchase 

214
00:10:45,000 --> 00:10:47,300
this company, if you're just 
going to buy the dip, you 

215
00:10:47,300 --> 00:10:49,200
shouldn't be surprised. 
If the stock continues to go 

216
00:10:49,208 --> 00:10:51,300
down in price. 
There's a lot of things that 

217
00:10:51,300 --> 00:10:54,100
Amazon is currently facing that.
I think it's going to continue 

218
00:10:54,100 --> 00:10:56,400
to face for the next year. 
Now that we've highlighted all 

219
00:10:56,400 --> 00:10:59,700
the bad parts of Amazon. 
It paints a pretty Grim picture 

220
00:10:59,700 --> 00:11:02,000
of Company. 
But there are some good things 

221
00:11:02,000 --> 00:11:03,600
and good things that I think are
worth highlighting. 

222
00:11:03,600 --> 00:11:06,000
I actually went through made a 
list of the things that that 

223
00:11:06,000 --> 00:11:07,400
keep me invested in this 
company. 

224
00:11:07,400 --> 00:11:10,200
The reason why I continue to 
hold it and will probably be 

225
00:11:10,200 --> 00:11:11,900
continuing to add to my 
position. 

226
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Let's go through these one by 
one. 

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First of all, inflation is a 
problem. 

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It's driven down Equity prices 
to a substantial extent, every 

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investor needs to acknowledge 
the role that the FED plays. 

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It's had a big impact on Amazon,
as well as every other every 

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other company the market, but 
especially companies like 

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Amazon, the Good news with 
inflation, is that it does seem 

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00:11:32,100 --> 00:11:34,700
to have flattened. 
I really think inflation is 

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starting to at least Peak and 
flatten and if anything it's 

235
00:11:37,900 --> 00:11:41,000
headed on a downward trajectory 
we've had month after month 

236
00:11:41,000 --> 00:11:44,400
after month of inflation coming 
down steadily quicker than 

237
00:11:44,400 --> 00:11:48,800
expectations, that's great news.
That's a great Tailwind for 

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these type of companies over the
next year. 

239
00:11:51,500 --> 00:11:53,900
And not only that. 
But we looked at the chart here 

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of the federal funds rate 
spiking upwards at this insane 

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00:11:57,700 --> 00:11:59,300
rate. 
That's true. 

242
00:11:59,300 --> 00:12:02,500
But again, This is in the past 
and the federal funds rate is 

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likely going to be leveling out 
at around four point, seven, 

244
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five, five, five point two five.
That's the range that the FED 

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00:12:10,700 --> 00:12:14,500
thinks that they'll have to go. 
And if anything I'm in the camp 

246
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where I don't think they're 
going to have to go that high. 

247
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I believe Jeremy Siegel is more 
accurate with his predictions 

248
00:12:20,100 --> 00:12:22,400
and I certainly don't think the 
federal funds rate will keep 

249
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skyrocketing like it has over 
the past year. 

250
00:12:24,700 --> 00:12:26,900
So I view, this is a positive 
thing for Amazon. 

251
00:12:26,900 --> 00:12:29,700
Over the next year, I think that
the inflation story will largely

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ugly be playing out in a 
positive way. 

253
00:12:31,700 --> 00:12:34,500
Inflation will go down the 
federal funds, rate will level 

254
00:12:34,500 --> 00:12:37,800
out and that gives us a bit of 
an anchoring point and something

255
00:12:37,800 --> 00:12:41,100
more stable to look at than just
wondering how high these numbers

256
00:12:41,100 --> 00:12:42,900
will go. 
Now, number two, Amazon has 

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grown substantially since 2020. 
Remember Amazon right now is 

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trading at the same share price,
that was in q1 Q2 of 2020. 

259
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But the business has grown, and 
every way possible, let's go 

260
00:12:54,400 --> 00:12:55,700
ahead and just look at the Top 
Line. 

261
00:12:55,700 --> 00:12:57,600
Growth of the company. 
We can switch to annually here. 

262
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This is what it looks like. 
Revenue of the company in 2020 

263
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was 386 billion. 
So the revenues gone from 386 to

264
00:13:07,300 --> 00:13:10,800
this year, it's going to be 
above 500 billion, half a 

265
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trillion, you break that down 
and it said, 70 80 percent 

266
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increase in Revenue. 
But more importantly, Amazon is 

267
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growing quicker in the right 
places. 

268
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The company is growing faster. 
In the most profitable portions 

269
00:13:23,700 --> 00:13:25,300
of the company is growing 
slower. 

270
00:13:25,300 --> 00:13:27,300
In the most low-margin parts of 
the company. 

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The parts that have grown 
particularly fast over the past,

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00:13:29,800 --> 00:13:34,500
Year, our Amazon's web services 
ads and third-party sales all 

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this service portion of the 
business that has a highest 

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00:13:36,800 --> 00:13:38,500
margin. 
We can break this down on their 

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00:13:38,500 --> 00:13:41,300
earnings report. 
Let's go ahead and look at Q3 of

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00:13:41,300 --> 00:13:44,100
2020. 
This is when Amazon first broke 

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00:13:44,100 --> 00:13:46,300
out their ad business before 
this, they didn't reveal the 

278
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numbers, but they finally gave 
us our advertising Services here

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in the actual numbers. 
It was four point nine billion 

280
00:13:52,800 --> 00:13:55,500
dollars in Q3 of 2020. 
Now, we look at the same 

281
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business line, but we zoomed a 
current day. 

282
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This is the advertising 
services, and we have Three hair

283
00:14:00,700 --> 00:14:04,900
9.5 billion dollars. 
So the advertising Revenue, this

284
00:14:04,900 --> 00:14:10,800
business has grown by 90%, since
Q3 of 2020, 90% bigger, but the 

285
00:14:10,800 --> 00:14:12,300
stock is trading at the same 
price. 

286
00:14:12,400 --> 00:14:14,100
We can also look at third party 
sales again. 

287
00:14:14,100 --> 00:14:16,800
This is the more lucrative more 
high-margin part of Amazon's 

288
00:14:16,800 --> 00:14:19,600
retail business. 
And it was doing twenty point 

289
00:14:19,600 --> 00:14:23,300
four billion dollars in Revenue 
in Q3 of 2020. 

290
00:14:23,300 --> 00:14:26,500
We compare that to current day, 
and we have right here Q3 of 

291
00:14:26,500 --> 00:14:31,000
twenty twenty two, Twenty Eight 
billion 600, Ian, that is a 40 

292
00:14:31,000 --> 00:14:34,000
percent increase in the amount 
of third-party sales and then we

293
00:14:34,000 --> 00:14:36,500
can look at another piece of 
data here and see how fast their

294
00:14:36,500 --> 00:14:39,100
other profitable business has 
grown, which of course, is 

295
00:14:39,100 --> 00:14:42,100
Amazon web services. 
This chart shows two different 

296
00:14:42,100 --> 00:14:45,000
things. 
The red line is the actual AWS 

297
00:14:45,000 --> 00:14:46,400
Revenue. 
So this is the one that 

298
00:14:46,400 --> 00:14:49,500
everybody looks at the red line 
is the revenue and the revenues 

299
00:14:49,500 --> 00:14:51,300
actually growing incredibly 
fast. 

300
00:14:51,300 --> 00:14:53,900
I know it doesn't look like it 
on this chart, but if we just 

301
00:14:53,900 --> 00:14:57,500
looked at it on its own without 
the other data there, this is 

302
00:14:57,500 --> 00:15:00,600
what it looks like, Fast Revenue
growth and Quarter by quarter 

303
00:15:00,600 --> 00:15:04,400
growth but we add in commitments
that is the amount of contracts 

304
00:15:04,400 --> 00:15:08,300
that are 1 plus years of AWS. 
That's actually growing at a 

305
00:15:08,308 --> 00:15:12,000
faster rate than the revenue. 
AWS is revenue in Q3 of 2020 

306
00:15:12,000 --> 00:15:14,500
was. 
Eleven point six billion Q3 of 

307
00:15:14,500 --> 00:15:16,500
2022. 
It was twenty point five. 

308
00:15:16,700 --> 00:15:19,600
So it's grown nearly 90 percent 
since then. 

309
00:15:19,800 --> 00:15:23,400
Again, this is at a point where 
the stock is trading at the same

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00:15:23,400 --> 00:15:26,200
price, but the company and 
their, their biggest components 

311
00:15:26,200 --> 00:15:31,300
of the company are growing 40 90
and 80% then we look at the 

312
00:15:31,300 --> 00:15:33,900
amount of commitments to make 
sure that we have customers 

313
00:15:33,900 --> 00:15:36,300
lined up in the future. 
These are contracts that are 

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00:15:36,300 --> 00:15:40,300
Beyond 12 months and Q3 of 2020.
Amazon had forty four point 

315
00:15:40,300 --> 00:15:44,400
eight billion dollars in AWS 
commitments and Q3 of 2022. 

316
00:15:44,400 --> 00:15:48,000
They have 104 billion that's 
gone up over 100 percent. 

317
00:15:48,000 --> 00:15:52,400
And on an interesting related 
note, Amazon is actually growing

318
00:15:52,400 --> 00:15:53,800
their Cloud business 
commitments. 

319
00:15:53,800 --> 00:15:57,600
While Google is struggling to 
you can look at them in contrast

320
00:15:57,600 --> 00:16:02,200
here since Q4 of Dear, Google's 
commitments to their Cloud 

321
00:16:02,200 --> 00:16:03,900
business have basically 
flatlined. 

322
00:16:04,000 --> 00:16:05,100
They haven't really grown at 
all. 

323
00:16:05,400 --> 00:16:08,300
And Amazon's have continued to 
grow at a steady clip growing 

324
00:16:08,300 --> 00:16:10,800
from 80 billion now, to 104 
billion. 

325
00:16:11,200 --> 00:16:12,900
So that's just an interesting 
thing to see. 

326
00:16:13,100 --> 00:16:16,000
This shows that the companies 
that have the Head Start, the 

327
00:16:16,000 --> 00:16:17,900
all the developers already know 
how to work on. 

328
00:16:18,200 --> 00:16:20,100
Oftentimes they're the default 
choice. 

329
00:16:20,100 --> 00:16:22,900
So so far we have two good 
things for Amazon, inflation 

330
00:16:22,900 --> 00:16:24,100
does seem like it's already 
peaked. 

331
00:16:24,100 --> 00:16:25,900
It's on the way down the federal
funds rate. 

332
00:16:25,900 --> 00:16:27,700
Might go up a little bit, but 
they're going to come down as 

333
00:16:27,700 --> 00:16:31,300
well. 
And then we have On the story of

334
00:16:31,300 --> 00:16:34,200
the slowing growth, I don't 
think paints a clear picture 

335
00:16:34,500 --> 00:16:37,900
most investors will focus on the
top line revenue growth. 

336
00:16:38,100 --> 00:16:41,700
Like all revenue is equal but if
you look a little bit in what's 

337
00:16:41,700 --> 00:16:46,100
actually going on the revenue 
that's growing, the fastest AWS,

338
00:16:46,100 --> 00:16:49,500
the ads business and third party
sales is the most important 

339
00:16:49,500 --> 00:16:52,900
Revenue, the overall revenue of 
Amazon may slow down. 

340
00:16:53,000 --> 00:16:55,800
But that's from the first party 
sales, that's very low margin 

341
00:16:55,800 --> 00:16:58,200
Revenue. 
So in my opinion this point two 

342
00:16:58,200 --> 00:17:00,800
is very important, I think. 
The parts of Amazon that are 

343
00:17:00,800 --> 00:17:02,800
growing, the fastest are the 
most important parts. 

344
00:17:02,800 --> 00:17:05,700
Now, the third Point here is 
that Amazon is addressing these 

345
00:17:05,700 --> 00:17:07,700
Rising stock based compensation 
expense. 

346
00:17:07,700 --> 00:17:12,000
And employee expense, Amazon has
had a ton of hires over the past

347
00:17:12,000 --> 00:17:13,800
year. 
They doubled the size of their 

348
00:17:13,800 --> 00:17:16,500
Workforce. 
They hired like 600,000 people, 

349
00:17:16,800 --> 00:17:19,800
they expanded their Network 
double, I mean, it's crazy what 

350
00:17:19,800 --> 00:17:21,500
they've been doing. 
And that's what's really cause 

351
00:17:21,500 --> 00:17:24,300
this stock-based compensation to
just take off over the past 

352
00:17:24,300 --> 00:17:25,900
year. 
But this is something that Andy 

353
00:17:25,900 --> 00:17:28,800
Jesse is addressing currently, 
and he's going to be addressing 

354
00:17:28,800 --> 00:17:31,100
in 2023. 
Re we have reports that the 

355
00:17:31,100 --> 00:17:34,100
layoffs are being extended. 
The Amazon is looking at 

356
00:17:34,100 --> 00:17:37,000
cost-cutting budget cuts, 
everything they're doing. 

357
00:17:37,000 --> 00:17:39,600
They have an expected Roi. 
They have a very strict 

358
00:17:39,600 --> 00:17:42,400
investment policy. 
I think this is a lot more 

359
00:17:42,400 --> 00:17:44,300
strict than investors are giving
it credit for. 

360
00:17:44,600 --> 00:17:47,800
I think that Jesse is going to 
be a lot more strict with 

361
00:17:47,800 --> 00:17:50,900
cost-cutting and cost control 
next year than what investors 

362
00:17:50,900 --> 00:17:53,300
are expecting. 
So when I look at Amazon and 

363
00:17:53,300 --> 00:17:56,100
their stock based compensation 
and they're growing expenses, I 

364
00:17:56,100 --> 00:17:58,300
don't see that continuing to 
happen over the next year. 

365
00:17:58,600 --> 00:18:00,500
In fact, I would not You 
surprised. 

366
00:18:00,500 --> 00:18:04,700
If we saw this purple line here,
the stock based compost art to 

367
00:18:04,700 --> 00:18:07,200
level out, and then even go down
next year, I think that will 

368
00:18:07,200 --> 00:18:09,200
likely happen. 
And then, in addition to direct 

369
00:18:09,200 --> 00:18:10,600
cost cutting measures of laying 
off employees. 

370
00:18:10,600 --> 00:18:14,200
Amazon is also doing Warehouse 
automation. 

371
00:18:14,200 --> 00:18:16,000
This is something that is 
happening. 

372
00:18:16,000 --> 00:18:18,800
This is point number four. 
I've shown the videos of this 

373
00:18:18,800 --> 00:18:20,600
before. 
It's actually incredible to see 

374
00:18:20,600 --> 00:18:25,500
Amazon came out with this new 
robot called the Amazon sparrow.

375
00:18:25,500 --> 00:18:28,300
And a lot of people look at this
and they think it's cool. 

376
00:18:28,300 --> 00:18:30,900
But I've seen robots and 
Factories before. 

377
00:18:31,100 --> 00:18:33,500
And unless you're an engineer, 
and you're specifically a 

378
00:18:33,500 --> 00:18:35,900
robotics engineer, you probably 
don't have much of an 

379
00:18:35,900 --> 00:18:37,400
appreciation for this type of 
thing. 

380
00:18:37,600 --> 00:18:41,700
At least, you probably don't 
know how good it is, or how bad 

381
00:18:41,700 --> 00:18:44,900
it is, or how technologically 
advanced it is, from what I've 

382
00:18:44,900 --> 00:18:48,000
read from different people that 
specialize in robotics. 

383
00:18:48,400 --> 00:18:50,000
This thing is like a 
breakthrough. 

384
00:18:50,200 --> 00:18:54,100
It does picking, it does sorting
it does the one thing that 

385
00:18:54,100 --> 00:18:58,100
robots could not do to this 
extent, this thing can sort 

386
00:18:58,100 --> 00:19:01,100
millions and millions of 
different Items, all unique 

387
00:19:01,100 --> 00:19:03,800
different sizes and shapes into 
different baskets. 

388
00:19:04,000 --> 00:19:05,900
And this is one job role at 
Amazon. 

389
00:19:05,900 --> 00:19:08,900
That's extremely common but 
Sparrow, this robot here. 

390
00:19:08,900 --> 00:19:11,700
Also addresses a bigger issue, 
which is Amazon has too many 

391
00:19:11,700 --> 00:19:13,800
employees. 
They simply employ too many 

392
00:19:13,800 --> 00:19:16,800
people at their warehouses with 
too high of turnover. 

393
00:19:17,000 --> 00:19:19,500
So it's too expensive to keep 
running the company this way. 

394
00:19:19,800 --> 00:19:22,500
So we need to see a lot of 
automation like this and at 

395
00:19:22,500 --> 00:19:25,400
least the worst jobs at the 
warehouse and picking is a big 

396
00:19:25,400 --> 00:19:27,800
one, but Amazon also has a 
number of different robots, 

397
00:19:27,800 --> 00:19:29,400
helping to automate their 
warehouses. 

398
00:19:29,700 --> 00:19:32,000
As this continues, I think that 
margins will go higher. 

399
00:19:32,400 --> 00:19:35,700
Now, the last thing that I'd 
highlight in this isn't really 

400
00:19:35,700 --> 00:19:38,700
specific to 2023, but it's 
something that I think is worth 

401
00:19:38,700 --> 00:19:42,600
mentioning with Amazon is the 
high customer lifetime value. 

402
00:19:42,600 --> 00:19:44,700
Part of the reason that I feel, 
okay is an investor holding a 

403
00:19:44,700 --> 00:19:47,900
company, like Amazon through 
this massive volatility through 

404
00:19:47,900 --> 00:19:52,000
50%, draw downs and I still feel
at ease is because of the 

405
00:19:52,000 --> 00:19:56,000
lifetime value of a customer of 
Amazon, I look at the services. 

406
00:19:56,000 --> 00:19:59,500
This company offers Amazon Prime
with the 2-day shipping with 

407
00:19:59,800 --> 00:20:03,300
Music with the Amazon Prime 
video or the sports so on and so

408
00:20:03,300 --> 00:20:06,000
forth. 
I think the amount of customers 

409
00:20:06,000 --> 00:20:08,800
that are going to cancel that 
service over the next 10 years 

410
00:20:09,100 --> 00:20:11,100
are minimal. 
I think the amount of customers 

411
00:20:11,100 --> 00:20:14,000
are going to grow over time, and
I think the lifetime value of a 

412
00:20:14,000 --> 00:20:16,800
single customer is dramatic. 
I've been a member of Amazon 

413
00:20:16,800 --> 00:20:20,000
Prime for over 10 years and I 
can't even imagine canceling. 

414
00:20:20,000 --> 00:20:23,200
It it is just a part of my life.
It's it's one of the most basic 

415
00:20:23,200 --> 00:20:26,200
services that I'll probably have
for the next two decades, then 

416
00:20:26,200 --> 00:20:29,100
you have AWS when you're 
building different websites and 

417
00:20:29,100 --> 00:20:32,200
you build them. 
On AWS, you're basically locked 

418
00:20:32,200 --> 00:20:34,300
in. 
You could try to move off of it 

419
00:20:34,300 --> 00:20:37,200
but it's a huge Endeavor and 
you'd have to have significant 

420
00:20:37,300 --> 00:20:39,500
significant incentive to move 
off of it. 

421
00:20:39,800 --> 00:20:43,200
So Amazon has high lifetime 
value and their Amazon Prime 

422
00:20:43,200 --> 00:20:45,400
membership. 
They have high lifetime value 

423
00:20:45,500 --> 00:20:48,100
and their AWS service. 
And with the Amazon Prime 

424
00:20:48,100 --> 00:20:50,600
business, that's also directly 
linked to their advertising 

425
00:20:50,600 --> 00:20:52,000
business. 
So, when I look at the different

426
00:20:52,000 --> 00:20:54,600
services that Amazon offers, I 
think that they have a higher 

427
00:20:54,600 --> 00:20:56,700
lifetime value than most other 
companies. 

428
00:20:56,900 --> 00:20:59,200
Amazon is going to be around for
a long period of time. 

429
00:20:59,400 --> 00:21:03,200
They To figure this out in six 
months or in one year, they have

430
00:21:03,200 --> 00:21:05,300
a lot of time to be able to 
figure this out because they 

431
00:21:05,300 --> 00:21:08,100
have customers really locked 
into their services. 

432
00:21:08,400 --> 00:21:11,600
I think customers are locked 
into Amazon, Services far more 

433
00:21:11,600 --> 00:21:14,000
than other companies. 
I do analysis on lots of 

434
00:21:14,008 --> 00:21:16,000
companies come and go in my 
opinion. 

435
00:21:16,000 --> 00:21:18,600
Amazon is pretty entrenched. 
I think it's going to be around 

436
00:21:18,600 --> 00:21:21,000
for a long period of time. 
It has a longer Runway to be 

437
00:21:21,008 --> 00:21:23,700
able to figure out how to best 
monetize their customers. 

438
00:21:23,700 --> 00:21:25,800
So that's it. 
That's both the good and the bad

439
00:21:25,800 --> 00:21:28,300
of Amazon. 
In my opinion, going into 2023. 

440
00:21:28,700 --> 00:21:31,900
I wouldn't buy the Dip today, 
expecting some huge rally. 

441
00:21:31,900 --> 00:21:35,100
I think there's too many - 
catalysts and things that Amazon

442
00:21:35,100 --> 00:21:38,000
needs to figure out. 
But long-term next couple of 

443
00:21:38,000 --> 00:21:41,800
years, three five, six years. 
I'm very bullish on the company.

444
00:21:42,100 --> 00:21:44,500
I think there's so many things 
going for it that investors 

445
00:21:44,500 --> 00:21:47,000
aren't paying attention to 
because of short-term noise. 

446
00:21:47,300 --> 00:21:48,800
That's all for now. 
Hope you enjoyed. 

447
00:21:49,000 --> 00:21:49,700
See you in the next one.