Oh C'mon CNBS (Amazon) - OUTRAGEOUS LIE ALERT!
The Market Ticker - Commentary on The Capital Markets
2017-10-27 10:15 by Karl Denninger
in Company Specific , 693 references Ignore this thread
Oh C'mon CNBS (Amazon) - OUTRAGEOUS LIE ALERT!
 

CNBC should be taken off the air for this outrageous pumping of a scam.

And a scam it is.

Here's from the Amazon Q, off their own page:

DateSalesCOGSSales/Cog %FulfillmentNet% Profit
2016/Q2211161918010.09%3878-1942-9.20%
2016/Q322339212605.08%4335-3256-14.58%
2016/Q430629289585.77%5719-4048-13.22%
2017/Q123734224405.77%4697-3403-14.34%
2017/Q224745234515.52%5158-3864-15.62%
2017/Q328768275494.42%6420-5201-18.08%

Sales (of goods) in gross, cost of said goods, mark-up over cost, fulfillment expense, net (Sales - COGS - Fulfillment) and finally, profit on sales of goods ignoring SG&A and Marketing, which of course are real costs (in other words, this is better than "operating earnings" as it excludes the cost of labor and other day-to-day expenses normally in SG&A!)

Note that their margin on product sales (sales minus fulfillment and cost of products) for products has gone from a negative 9.2% margin to a negative 18.08 percent margin!

They're selling everything physical they sell, including all the costs they lard up on the sellers, at an 18% LOSS -- and that's BEFORE the firm's operating expenses!

What's even better is that they're getting squeezed margin-wise on all metrics at once.  Their gross margin (cost of goods sold .vs. sales) is down from 10.09% to 4.42% over the last year and change -- more than early half.  At the same time while sales went up 29% fulfillment costs skyrocketed by 48% and what's worse the cost of goods sold was up by 29% as well -- ~75 basis points above gross sales!

"Leverage"?  Well sure, for a good long time you can sell at a loss as your costs go up on all metrics much faster than your sales do and drive other people out of business doing that.  The problem is that the market is supposed to stop you from taking that path through two mechanisms: Unfair competitive practice law and Wall Street is not supposed to let you pull this crap on a sustained basis either -- the street analysts should immediately call "BeeEss!" on any such attempt.

But Amazon doesn't only do it on a sustained basis they're boosted by Wall Street "opinions" that intentionally omit the very facts found on the top of the company's own financial reports!  There was not one word on the outrageous destruction of operating margins and ridiculous expansion of negative gross margins from all sides in any of the research notes I read this morning.

Jeff Bezos doesn't walk on water.  He's not special.

The company is in fact robbing everyone up and down the line and in any sort of market where there was justice those displaced would come after him and toss his ass in prison.  But we don't live in such a market or nation anymore and as a result Bezos' "net worth" goes up by billions every time he reports an expanding negative profit margin.

Bezos has been pulling this crap with Amazon for more than ten years continually, and yet they continue to expand the scheme with the full support of Wall Street and so-called "media", supporting their loss on product sales with cross-subsidization on a "just barely" basis.  This is how they get their tax margin down too.  May I remind you that so-called "corporate tax relief" will do exactly nothing to change any of this (or improve anything for them) since the company pays damn near zero tax to begin with as all of its product offerings are in fact sold at a loss!

You don't pay corporate income tax on a loss.

Ed: The original table had an error in the pickup; their IR site had the old file on it.  Now corrected with current data and expanded to fill in the missing quarters from EDGAR (official SEC publication site.)

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