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AMZN, a +27% higher target price
Current, target price 3,321, 4,203 (+27%)

August 11th, 2021
1 minute read

Sales up again
  • Sales increased by 4% in the second quarter to 113,080 million dollars which is below our forecast 113,944 million dollars.
  • This brings the average quarterly growth to 7%.
  • We predict average growth of 6% in this next 12 months to bring sales to 136,247 million dollars in the second quarter 2022.

Costs, stable
  • The cash cost ratio of net profit add depreciation minus sales as a percent of sales was up -83% in the second quarter profit was down slightly to 7,778 million dollars.
  • Average quarterly costs are now at -85%.
  • We use the average -85% costs to predict a 9,211 million dollars net profit in the second quarter of 2022.
Cashflow, now negative from investment
  • Cashflow was negative again -3,077 million dollars with investment spending of -12,988 million dollars in the second quarter.
  • Average quarterly Cashflow is now negative -47 million dollars.
  • We use lower -12,018 million dollars investment spending which with higher sales gives a rebound to 5,479 million dollars cashflow in the second quarter 2022.

Balance sheet, higher leverage
  • With new debt, cash increased from 33,834 to 40,380 million dollars in the second quarter.
  • Liabilities increased from 219,757 to 245,516 million dollars so net cash worsened from -185,923 to -205,136 million dollars.
  • With our forecast cashflow & assuming there’s a -25,352 million dollars equity payout, net cash will be -197,984 million dollars in 12 months time.

Value, a +27% higher target price
  • AMZN capital from the last six years worsened to -34,491 million dollars in the second quarter.
  • At the current market value of 1,682,000 million dollars, based on our forecasts, it’s at 3.11X sales & 4.62X assets with a 2% yield.
  • Our free cashflow forecast is 21,289 million dollars. At 90X (a 1.1% yield), this gives a 27% higher target price of 4,203 dollars.