Three Things to Like about AMZN Stock
“We are internally driven to improve our services, adding benefits and features, before we have to. We lower prices and increase value for customers before we have to. We invent before we have to. These investments are motivated by customer focus rather than by reaction to competition.”
In the last two years, Amazon has spent $7.2 billion improving its business at the expense of short-term free cash flow. That’s how committed it is to improving the customer experience — AMZN stock investors (including Bezos) be damned.
Amazon Web Services: Ken Sena is an analyst for Evercore Partners (EVR). He expects Amazon’s cloud computing business to be worth $50 billion, or 25% of its total enterprise value, by the end of 2015. That’s less than a decade after Bezos and company created AWS. With computing infrastructure growing by leaps and bounds, as Google knows all too well, the offspring of AWS will make the biggest difference for AMZN stock.
AWS Marketplace: This is where the profits are expected to flow for AMZN stock. The software marketplace currently offers 1,110 software product listings that users pay for on a usage or subscription basis or a combination of both. AMZN takes 20% of any billings. Sena believes the marketplace, which has seen a huge increase in usage over the past year, will be worth $20 billion by 2015 despite revenues representing just 1% of Amazon’s total revenue. Healthy profit margins have a lot to do with that valuation.