Amazon has been one of the most customer centric businesses from Day 1, and I should have held my shares in the company on that simple argument alone. After holding Amazon shares for many years, I sold them when I got dizzy on their lofty valuation about three years back, simply because I could not see how Amazon as an eCommerce business would be able to sustain its revenue growth and justify its valuation. At the time, Amazon had been marginally profitable for many years, and its push into AWS made sense but added little to the bottom line. I was obviously wrong in selling, as the share more than tripled in value since (don’t worry, I did alright anyway…). I could just not see how well positioned Amazon was beyond its original eCommerce services, and it has spread its strategic wings significantly since, as the excellent update on Amazon’s hiring and strategic priorities by CB Insights shows (see link below). Still, it remains to be seen whether Amazon will be able to compete successfully in such diverse areas as consumer tech (Echo, Alexa and more), media & entertainment (Amazon Video and beyond), next generation logistics (robotics, drones etc.) or the wider area of AI. Amazon will also face increasing competition in its core eCommerce and AWS services, so their valuation today (market cap of about US$ 430bn or P/E of about 180) remains very high. On that basis, I cannot convince myself to buy again but I would love to hold some shares. After all, this is still Jeff Bezo’s Amazon of Day 1.
See here CB Insights’ update on Amazon’s strategy: https://www.cbinsights.com/blog/amazon-strategy-teardown/