- Q1 results confirmed our bullish thesis on Amazon’s advertising business.
- Amazon has been making bold moves in the advertising space.
- Amazon has massive advantages in advertising and could rival and potentially surpass Facebook and Google.
- Amazon, Alphabet, Microsoft and Facebook’s Q1 weighted-average capex exceeded consensus by 40%.
- We expect accelerating capex investments to continue since it is part of a broader trend.
- This trend raises multiple questions for investors. In this article, we raise two.
- Amazon is reporting Q1 2018 earnings soon, and we are excited to learn more about its emerging advertising business.
- Amazon’s digital advertising is not broken out in filings, and is not well covered by the media, but the company is becoming a serious contender in this space.
- We believe this unappreciated business could be worth $300 per share, or 20% of Amazon’s current value.
(This is a reprint of my SeekingAlpha article, which is now behind a pay walled.)
- Trump pressures USPS to raise rates on Amazon, but his case is weak.
- Amazon is well positioned to win this battle.
- Q1 earning is coming: buy the dip on a potential acceleration in investments.
Facebook’s stock price has had a near-perfect correlation with its Monthly Active Users (MAU) since IPO. This is in accordance with Metcalfe’s Law, which states that a network’s value is proportional to the number of users. Metcalfe’s Law has been used to value telecom, Bitcoin, and social media networks. Despite the recent negative publicity from the leaking of user data, Facebook’s MAUs has never been higher.