Amazon (AMZN) put out its usual post-holiday press release this morning, stating that it was a record-breaking holiday season. To be fair, every holiday season breaks records for the dominant eCommerce giant.
The company typically puts out a rather fluffy post-holiday press release without much substance or hard data.
- Customers purchased millions of Amazon Fire TV, Fire Tablet, and Kindle products this holiday season.
- Prime membership continued to grow this holiday season, with tens of millions of people starting Prime free trials or paid memberships.
- The best-selling electronics this holiday season included Bose QuietComfort 35 (Series II) Wireless Headphones, the Samsung Flat 65" 4K UHD 8 Series Smart LED TV, Apple iPad (Wi-Fi, 32GB) in Space Gray (AAPL), Wemo Mini Smart Plug, Blue Yeti USB Microphone in Blackout, Wyze Cam 1080p HD Indoor Wireless Smart Home Camera, and HP Sprocket Photo Paper (HPQ).
- Some of the most popular brands bought with Prime Wardrobe during the holiday season were Amazon Essentials, Daily Ritual and Goodthreads, in addition to Calvin Klein (PVH), Champion (HBI), and UGG (DECK).
- As a top trend, athleisure was a holiday gifting favorite this season with a wide assortment available on Amazon from customer-loved brands including Champion, Alo Yoga, Nike (NKE), adidas (ADDYY) and Monrow.
- Customers use of Alexa for shopping more than tripled this year compared to last year.
Amazon reportedly accounts for nearly half of eCommerce sales in the US and 5% of all retail sales. Market share gains for Amazon are all too real for most other retailers dealing with lower traffic. As competitors have ramped up online efforts, they have found it comes with more complications and lower margins.
Amazon will report fourth quarter results during the last week of January. The company guided for fourth quarter operating income of $2.1-3.6 billion vs. $2.1 billion last year with revenue up 10-20% to $66.5-72.5 billion.
After guiding quarterly profit above estimates two quarters in a row, the fourth quarter outlook fell below estimates on the top and bottom line in October. Amazon is expected to handily surpass its profit forecast, as it typically does.
While the eCommerce business continues to dominate, the ancillary advertising business and leading cloud computing business Amazon Web Services are what turn big profits.
Heading into today, the stock was down 34% from its all-time high in early September, but still up 15% year-to-date. While the disappointing fourth quarter forecast did not help, much of the decline came from the correction we have seen in the stock market more broadly.
With a ~$670 billion valuation, the stock trades at ~17x free cash flow estimates for the next twelve months, which seems hardly expensive given the company growth and dominant market positions.