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Jeff Bezos laughing above as he realizes that his exit stage left was literally followed by a bear.
The Federal Reserve is trying very, very hard to push your stocks lower.
Dudley Warns It Will Get Ugly (Bloomberg)
We might add that they are succeeding. That reality bit hardest when the results of Amazon.com Inc. (NASDAQ:AMZN) came through.
Data by YCharts
That one-day drop knocked out $200 billion of value and made investors come to grips with reality. We want to focus on these results, though, to show why we are seeing so many fallen angels all around us.
Amazon: Getting Everything Wrong In One Quarter
Let us quickly list the things AMZN got wrong.
1) Operating cash flow decreased by about 40% year over year.
That does not sound like a growth stock, but maybe things get better down the report.
2) Cash flow was an outflow of $18.6 billion versus an inflow of $29.4 billion for the trailing 12 months.
A $48 billion delta in the wrong direction.
3) Financing was done partly via issuance of about 4 million shares or $10 billion worth of AMZN.
$40 billion annualized run rate exceeds the market capitalization of 300 out of 500 S&P 500 companies. So no buyback for you at least.
4) Net sales increased 7% to $116.4 billion in the first quarter, compared with $108.5 billion in first quarter 2021.
Excluding AWS, sales grew at about 3%, less than half the run rate of inflation.
5) Operating income was negative for the whole ex-AWS segment.
AMZN Operating Losses (AMZN Q1-2022)
What This Means For AMZN
For the longest time in AMZN’s history, nobody cared about profits. The profits will come when they come was the mantra. Then suddenly AMZN delivered strong profits at the beginning of the pandemic and got everyone enthused that their thesis was playing out. The reversal speaks volumes about how bad the business model is. In the absence of AWS financing this experiment and the market giving AMZN a zero effective cost of equity, the company would have probably gone under a long time back. But in the reality we live in, AMZN is exempt for making money as that …….
Source: https://seekingalpha.com/article/4505800-why-federal-reserve-not-bailing-poor-investments-amazon