Amazon: The Good, The Bad, And The Algorithm

Amazon: The Good,The Bad,And the

Algorithm

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Since AMZN missed Q4 earnings mainly due to weak revenue growth in the international market, most notably, international sales slowed to 13% in Q4 from 21% 4Q12 plus higher holiday shipping costs

Has caused AMZN’s share price to have fallen around 10% YTD making now a buying opportunity for the worlds largest online retailer

The Good

Net sales improved 22% to $74.5 billion year over year in 2013

In 4Q13, net sales augmented 20% to $25.59 billion, an increase from $21.27 billion in 4Q12

Over 20 million Amazon Prime members

Source: Google Finance

Amazon Growth in 2013

Estimated Quarterly U.S. Retail E-Commerce Sales as a Percent of Total Quarterly Sales

Source: US Department of Commerce

E-commerce sales accounted for only 5.8% of total retail sales in 2013Plenty of room for growth in e-commerce

Pushing Boundaries With Amazon Drones

Amazon Drones

Delivery in 30 minutes

10 Mile Delivery Radius (16 Kilometers) from the strategically located fulfillment centers

Can hold products under five pounds (90% of all Amazons offerings)

"The FAA is actively working on rules and an approach for unmanned aerial vehicles that will prioritize public safety. Safety will be our

top priority, and our vehicles will be built with multiple redundancies and designed to

commercial aviation standards.”

- Statement From Amazon

The Bad

After posting disappointing fourth-quarter results on January 30th, Amazon stated it was considering

raising the price of the Prime service by $20 to $40

UBS Downgraded

AMZN To NeutralUBS commissioned a survey to see how a price hike would affect current customer sentiment.

94% of Amazon Prime customers were likely going to renew their subscription as is

A raise of $20 or $40 caused that percentage to drop to 58% and 24% respectively.

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Amazon: The Good, The Bad And The Algorithm

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