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Antonio Linares
🎯🎯
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🎯🎯
$AMZN ‘s free cash flow is set to rise rapidly in the coming years, and there's a simple reason behind it.
Over the past two decades, every time Amazon increased its capital expenditure (capex), its free cash flow initially dipped, only to soar to new all-time highs down the line.
This phenomenon can be explained by Amazon's approach to capex.
Each increment in capex serves as a new operational baseline to improve customer service and expand their customer base.
During these periods, the company faces added costs as it waits for demand to catch up and for new facilities to become fully operational.
As a result, operating margin and free cash flow temporarily suffer.
However, Amazon has consistently emerged stronger on the other side, defying consensus predictions.
The company's operational leverage and free cash flow per share improve significantly after each capex cycle.
This pattern, that I have termed "Amazon's Capex Ghost," has been a powerful mental model for long-term Amazon investors.
Notably, the most recent capex cycle from 2020 to 2022 was the largest ever, with the fulfillment network doubling in size and labor shortages affecting the working capital situation.
Consequently, free cash flow experienced a substantial decline.
$AMZN's focus on continuously improving its three fundamental customer pillars (price, convenience, and selection) and implementing cost and price reductions has been instrumental in boosting free cash flow per share after each capex cycle.
The driving force behind this phenomenon lies in qualitative organizational properties that cannot be fully captured by numbers.
Amazon's ability to efficiently deploy and operate additional capacity stems from properties such as its culture of experimentation and learning, genuine customer-centricity, and high standards that repel mediocrity and attract excellence.
These properties not only contribute to Amazon's ability to bounce back from capex cycles but also enable successful expansion into new businesses, as exemplified by the rise of Amazon Web Services (AWS) as the company's profit engine.
In summary, Amazon's trajectory is driven by its commitment to delighting customers and the unique organizational properties that fuel its efficient growth.
The company's long-term prospects remain promising as it continues to focus on improving customer experience and expanding its businesses.
Free cash flow is likely to bounce back up, harder than it has fallen over the last few years.
Stay tuned for more insights on Amazon's fascinating journey! tweet
The Long Investor
$SPY You see the 50 Day MA rejected
What we see:
- Wave 5 completed at the target level
- Wave 5 entered a tight ascending triangle, typical of Wave 5
- Market rallied 26% in 5 months in Wave 5
- Market bounced in 3 waves to the 50 Day MA, also signs of a lower low next.
- RSI and MACD on the weekly now descending after a 2 year high
- S&P PE was at an average of 29 at its height of Wave 5, double the historical average.
- HOT CPI - not expected
- US 10 Yr extending to 5%
- GOLD making ATH’s
- Yen collapsing
- Bonds collapsing
You see a rejection a the 50 Day MA, we see the big picture.
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$SPY You see the 50 Day MA rejected
What we see:
- Wave 5 completed at the target level
- Wave 5 entered a tight ascending triangle, typical of Wave 5
- Market rallied 26% in 5 months in Wave 5
- Market bounced in 3 waves to the 50 Day MA, also signs of a lower low next.
- RSI and MACD on the weekly now descending after a 2 year high
- S&P PE was at an average of 29 at its height of Wave 5, double the historical average.
- HOT CPI - not expected
- US 10 Yr extending to 5%
- GOLD making ATH’s
- Yen collapsing
- Bonds collapsing
You see a rejection a the 50 Day MA, we see the big picture.
tweet
The Long Investor
RT @TheLongInvest: If you had to choose one of these beaten down stocks to buy, which one would you go for?
$SOFI
$INTC
$BABA
$NKE
$PFE
$DNA
$SNAP
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RT @TheLongInvest: If you had to choose one of these beaten down stocks to buy, which one would you go for?
$SOFI
$INTC
$BABA
$NKE
$PFE
$DNA
$SNAP
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Brandon Beylo
RT @marketplunger1: Here's a simple strategy in a world where nobody cares to re-rate your cheap stocks, and they stay cheap forever.
1) Find companies that nobody cares about that are trading at ridiculously low valuations.
2) Ensure that those companies will keep earning profits at some sustainable level.
3) Buy the ones explicitly saying,"“we will return most of our earnings to shareholders through dividends, buybacks, or both"”
It is painfully simple but significantly narrows the investable universe of "cheap" stocks.
Also reveals how important capital allocation is even amidst the cheapest stocks.
tweet
RT @marketplunger1: Here's a simple strategy in a world where nobody cares to re-rate your cheap stocks, and they stay cheap forever.
1) Find companies that nobody cares about that are trading at ridiculously low valuations.
2) Ensure that those companies will keep earning profits at some sustainable level.
3) Buy the ones explicitly saying,"“we will return most of our earnings to shareholders through dividends, buybacks, or both"”
It is painfully simple but significantly narrows the investable universe of "cheap" stocks.
Also reveals how important capital allocation is even amidst the cheapest stocks.
tweet
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Brandon Beylo
“This pullback in metals prices is good and healthy.
We needed a shakeout of positioning for the next move higher.
I welcome the volatility.” https://t.co/6vdnjt4rqV
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“This pullback in metals prices is good and healthy.
We needed a shakeout of positioning for the next move higher.
I welcome the volatility.” https://t.co/6vdnjt4rqV
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Q-Cap
This is the « Beat + Raise » are not good enough anymore part of the cycle.
Rate expectations are driving the bus.
And my guess is the first central bank to cut will be Canada.
Trudeau’s approval numbers are horrendous (70% disapproval rating according to Angus Reid). He needs to change that narrative and he’s already publicly said he’d like rate cuts very soon (Of course he does that little prick).
Currently , mkts are pricing in a 65% chance of a -25bps rate cut in Canada at the June meeting vs an 8% chance for the FED cutting rates are the June meeting.
If this actually comes to fruition , there will be a meaningful narrative change in all markets.
tweet
This is the « Beat + Raise » are not good enough anymore part of the cycle.
Rate expectations are driving the bus.
And my guess is the first central bank to cut will be Canada.
Trudeau’s approval numbers are horrendous (70% disapproval rating according to Angus Reid). He needs to change that narrative and he’s already publicly said he’d like rate cuts very soon (Of course he does that little prick).
Currently , mkts are pricing in a 65% chance of a -25bps rate cut in Canada at the June meeting vs an 8% chance for the FED cutting rates are the June meeting.
If this actually comes to fruition , there will be a meaningful narrative change in all markets.
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Clark Square Capital
RT @AReviewOrTwo1: This is a very good list on the characteristics of an outstanding analysts / PMs: https://t.co/gTpt8zFXGr
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RT @AReviewOrTwo1: This is a very good list on the characteristics of an outstanding analysts / PMs: https://t.co/gTpt8zFXGr
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Offshore
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Brandon Beylo
Somehow I feel like $U.UN will close lower tomorrow despite this news.
And yes, we are long.
#uranium
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Somehow I feel like $U.UN will close lower tomorrow despite this news.
And yes, we are long.
#uranium
“Wyoming has the uranium to replace Russian imports, and we’re ready to use it.” -ranking member @SenJohnBarrasso https://t.co/FLEGZXYQLW tweet
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Clark Square Capital
Greenlight Q1 24 Investor Letter:
https://t.co/x7lGgBatbB https://t.co/smReIlVTJc
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Greenlight Q1 24 Investor Letter:
https://t.co/x7lGgBatbB https://t.co/smReIlVTJc
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