stefano olivotto asked 2 years ago
Hi guys,
I bought Amazon stocks in August last year and now I see that price went back to the level I paid.
In my opinion Amazon profitability could be impacted by US tariffs and I'm not sure if this is already fully incorporated in actual prices. What is your opinion about it?
Thanks and happy Easter
Stefano
1 Answers
Victor Chng Staff answered 2 years ago
Hi Stefano,
It depends on how you view the situation. Based on the current price-to-cash-flow valuation, Amazon is trading around negative two standard deviations from its historical average. If this situation is temporary, it presents a favourable risk/reward opportunity. Since many investors are concerned about the impact of tariffs on Amazon, it's important to focus on the actual breakdown of operating profit. Looking at the figures, the international market and AWS together account for approximately 64% of Amazon’s operating profit, and the cloud business is still in the early stages of growth. If you have a long-term investment horizon, Amazon appears to be a bargain at the current valuation. As I always say, depressed valuations often come with a lot of bad news. It’s our job as investors to determine whether the situation is temporary or permanent.
Hope this helps.
It depends on how you view the situation. Based on the current price-to-cash-flow valuation, Amazon is trading around negative two standard deviations from its historical average. If this situation is temporary, it presents a favourable risk/reward opportunity. Since many investors are concerned about the impact of tariffs on Amazon, it's important to focus on the actual breakdown of operating profit. Looking at the figures, the international market and AWS together account for approximately 64% of Amazon’s operating profit, and the cloud business is still in the early stages of growth. If you have a long-term investment horizon, Amazon appears to be a bargain at the current valuation. As I always say, depressed valuations often come with a lot of bad news. It’s our job as investors to determine whether the situation is temporary or permanent.
Hope this helps.
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