Tag Archives: AMZN

Apple's HomePod Makes a Small Dent in Smart Speaker Market During Debut Quarter

Apple (NASDAQ:AAPL) officially jumped into the smart speaker market in the first quarter with the HomePod, and analysts believe that sales thus far are “underwhelming.” Siri remains less capable than its competing counterparts, HomePod only supports Apple Music for full functionality, and the $350 price tag positions it at a significant premium. With HomePod being included in the company’s catch-all “Other Products” segment, investors aren’t likely to get much official data from Apple anytime soon.

That’s where third-party estimates come in.

HomePod on a shelf

Image source: Apple.

Apple shipped 600,000 HomePods in the first quarter

Market researcher Strategy Analyticsis out with its estimates on the smart speaker market for the first quarter, estimating that Apple shipped approximately 600,000 units after HomePod launched in February. Amazon.com (NASDAQ:AMZN) is maintaining its strong grip on the market, although its share did drop quite a bit. But the overall market is simply growing so quickly that the e-commerce giant still doubled unit shipments of Echo devices. Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) subsidiary Google continues to make headway as well.

Vendor

Q1 2017 Units

Q1 2017 Market Share

Q1 2018 Units

Q1 2018 Market Share

Amazon

2 million

81.8%

4 million

43.6%

Google

0.3 million

12.4%

2.4 million

26.5%

Alibaba

0

0%

0.7 million

7.6%

Apple

0

0%

0.6 million

6%

Xiaomi

0

0%

0.2 million

2.4%

Others

0.1 million

5.8%

1.3 million

13.9%

Total

2.4 million

100%

9.2 million

100%

Data source: Strategy Analytics. Figures rounded.

The Chinese market for smart speakers continues to grow, with local vendors like Alibaba and Xiaomi (which is preparingto go public soon) stepping up to meet the demand, according to Strategy Analytics. Amazon, Google, and Apple do not currently ship smart speakers into the Middle Kingdom. On the earnings callearlier this month, CEO Tim Cook noted that HomePod is only available in the U.S., U.K., and Australia right now, with availability in more markets coming soon.

While Apple generally does not place much value in unit share, it’s clear that Amazon and Google are enjoying unit growth thanks to broader portfolios of devices offered at lower price points. That’s why the “HomePod Mini” that Apple is rumored to have in the pipeline has a lot of potential, as it would make the idea of buying multiple devices a more tenable proposition for consumers.

Of course, HomePod was only available for about half of the quarter, so its performance isn’t all that representative quite yet.Let’s see how the Mac maker fares in the quarters ahead.

Should You Buy Home Depot Stock After Earnings? 3 Pros, 3 Cons.

Home Depot Inc (NYSE:HD) disappointed investors with a rare soft earnings report on Tuesday. The company did beat on EPS by two cents. It came up very short on the revenues line, however, with $24.9 billion in sales falling $270 million short of expectations. That left Home Depot with just a 4.4% year-over-year growth rate. That wasn’t enough to please investors. HD stock is trading down modestly following its earnings report.

That may not be a fair reaction, however. As we’ll see in the pros and cons below, the earnings miss was largely driven by the weather. Bulls and bears disagree on the broader ramifications of that. Zooming out, Home Depot is the best player in its field, but its stock also fetches a premium valuation. That said, is Home Depot stock worth buying today?

HD Stock Cons

Will 2018 Miss Guidance?: HD stock bulls will say that this sales miss was weather-driven and not important. They have a valid point. But they could be wrong.

Reuters quoted an analyst who doubted that Home Depot will make up all the lost sales in future quarters: “The lower-than-expected sales could pressure Home Depot’s ability to meet its full-year targets,” Loop Capital analyst Laura Champine said. “How much of the sales they’ve missed will they get back? That’s the key.”

Indeed, given Home Depot’s steep discounting on items such as patio furniture, the company may see a more than one quarter impact on its profitability.

Largely Played Out Market: Within the United States, there’s likely not much opportunity for additional stores. For example, in the latest quarterly report, we see that Home Depot added just four net stores over the past year.

That means that growth opportunities going forward will be diminished. The company has done well internationally. It is one of Canada’s largest home improvement chains. Additionally, it has more than 100 stores (and growing) in Mexico, which should be a booming market in coming years. All that said, without much growth opportunity in the United States, expect long-term margins to decline as competitors cut prices to try to maintain market share. As a mature market, investors shouldn’t expect the same eye-popping growth that Home Depot stock previously delivered.

More Expensive Than Lowe’s: HD stock is significantly more expensive than stock in its chief rival, the Lowe’s Companies, Inc. (NYSE:LOW). Lowe’s stock is selling at 21x trailing PE and 14x forward PE. That matches up favorably against Home Depot stock at 25x trailing and 19x forward PE. The comparison looks even worse for Home Depot once you realize that it has a far more leveraged balance sheet than Lowe’s which should, in theory, make Home Depot more profitable.

On a revenues basis, HD stock also looks pricey. The market values HD stock at $221 billion for $100 billion in annual revenues. Whereas Lowe’s has a market cap of $72 billion against $69 billion in revenues. That means that the market is willing to pay a dollar for a dollar of Lowe’s revenue, but more than 2x that for a dollar of Home Depot revenues. Home Depot has the better brand, but is it worth that much of a premium?

HD Stock Pros

Earnings Softness Was Weather-Driven: Home Depot’s management said that unusually cold weather this spring caused the earnings miss. Due to abnormally chilly conditions across much of the U.S., folks delayed the start of their gardening and yardwork this year. That led to, predictably, serious volume declines for products such as fertilizers. Specifically, that led to the CEO stating that: “The miss in terms of garden was significant against what we planned”.

Management suggested this was merely shifted demand, not an overall loss. So far, the company sees May sales growing at a double-digit rate, making up for much of the first quarter’s shortfall. Overall, that allowed Home Depot to maintain guidance for the full year. On the whole, the bulls say that the earnings miss won’t have lingering effects for Home Depot stock.

Web-Resistant Retailer: Retail used to be a classic sector for investors. Lately though, given Amazon.com, Inc.’s (NASDAQ:AMZN) monopolization of wide swaths of the retail landscape, investors have given up on shopping investments.

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Home Depot stock, however, has fared well despite the so-called retail apocalypse. There are several good reasons for that. For one, Home Depot has expanded internationally in Mexico with its huge construction market. Within the U.S., do-it-yourselfers seem to still benefit from having in-store help to guide purchases. Also, for certain projects, getting a part or tool is an immediate need, where the consumer won’t wait two days for delivery. Finally, many of Home Depot’s products are heavy or bulky, making online shipping uncompetitive with the company’s streamlined supply chain.

Huge Dividend/Buyback: HD stock treats its shareholders well. Management has been jacking up the dividend for more than a decade now. Over the past 10 years, it has averaged a 16% compounded dividend growth rate. During the past five years, as the housing market recovered, management has gotten even more generous, with a 24% dividend growth rate.

That means that while Home Depot stock yields 2% now, a buyer five years ago is now getting 5.7% on their initial investment. Don’t overlook the power of a modest starting yield that grows explosively. On top of that, Home Depot is buying back tons of stock. Since 2010, the amount of Home Depot stock outstanding has plunged from 1.8 billion shares then to just 1.15 billion today. That creates a ton of value for the remaining stockholders and supercharges returns and dividend growth.

HD Stock Verdict

Home Depot is the best-in-class retailer in its niche. It’s largely Amazon resistant, and has built a nice web presence itself. Furthermore, its international efforts, particularly in Mexico, give it further growth opportunities even with the US market tapped out.

That said, HD stock is expensive in its own terms and compared against Lowe’s. The U.S. market is unlikely to perform nearly as well as in the past, leading to falling profit margins. Home Depot is a great company, but the stock price reflects that already. As for what the stock will do for the remainder of 2018, much will come down to whether this earnings whiff was a one-off or the start of a problematic trend.

At the time of this writing, the author held no positions in any of the aforementioned securities. You can reach him on Tw

5 Stocks That Could Be the Next Amazon

Amazon.com, Inc. (NASDAQ:AMZN) has been one of the more impressive stocks of the past 25 years. In fact, AMZN now has returned nearly 100,000% from its IPO price of $18 ($1.50 adjusted for the company’s subsequent stock splits).

A large part of the returns have come from two factors. First, Amazon has vastly expanded its reach. What originally was just an online bookseller now has its hands in everything from cloud computing to online media to groceries. And its shadow is even larger. A potential entry by Amazon has rattled pharmacy stocks and medical distributors, among others.

Secondly, as a stock, AMZN has managed the feat of keeping a growth stock valuation for over two decades. I’ve long argued that investors can’t focus solely on the company’s high P/E ratio to value Amazon stock. But however wise an investor might the current multiple is, the market has assigned a substantial premium to AMZN stock for over 20 years now.

It’s an impressive combination — and one that’s likely impossible, or close, to duplicate. But these five stocks have the potential to at least replicate parts of the Amazon formula. All five have years, if not decades, of growth ahead. New market opportunities abound. And while I’m not predicting that any will rise 100,000% — or 1,000% — these five stocks do have the potential for impressive long-term gains.

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5 Stocks That Could Be the Next Amazon Stock: JD.com (JD) 5 Stocks That Could Be the Next Amazon Stock: JD.com (JD)Source: Daniel Cukier via Flickr

JD.com Inc(ADR) (NASDAQ:JD) is the company closest to following Amazon’s model. While rival Alibaba Group Holdings Ltd (NYSE:BABA) gets most of the attention, it’s JD.com that truly should be called the “Amazon of China,” as Will Healy pointed out in December.

Like Amazon (and unlike Alibaba), JD.com holds inventory and is investing in a cutting-edge supply chain. It, too, is expanding into grocery, like Amazon did with its acquisition of Whole Foods Market. A partnership with Walmart Inc (NYSE:WMT) should further help its off-line ambitions. JD.com even is cautiously entering the finance industry.

That ability to both provide best-in-class logistics and satisfy a wide range of customer needs is what has made Amazon a success. And while JD may not rise to the scale of Amazon, at its current valuation it doesn’t have to. After a recent pullback, JD trades at less than 26x forward EPS. That’s despite 40% revenue growth in 2017, and expectations for a 30% increase in 2018.

And it sets up a scenario where JD stock could — if sentiment finally turns in its favor for good — appreciate for years, thanks to both strong bottom-line growth and an expanding multiple from optimistic investors.

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5 Stocks That Could Be the Next Amazon Stock: Square (SQ) 5 Stocks That Could Be the Next Amazon Stock: Square (SQ)Source: Chris Harrison via Flickr (Modified)

Admittedly, I personally am not the biggest fan of Square Inc (NYSE:SQ) stock. I like Square as a company, but I’ve questioned just how much growth is priced into SQ already.

Of course, skeptics have done little to dent the steady rise in AMZN stock. And valuation aside, there’s a clear case for Square to follow an Amazon-like expansion of its business. Back in January, Instinet analyst Dan Dolev compared SQ to AMZN and Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG), citing its ability to expand from its current payment-processing base:

In 10 years, Square is likely to be a very different company helped by accelerating share gains from payment peers and relentless disruption of services like payroll and human resources.

Just as Amazon used books to expand into e-commerce, and then e-commerce to expand into other areas, Square can do the same with its payment business. The small business space is ripe for disruption, as Dolev points out. Integrating payments into payroll, HR, and other offerings would dramatically expand Square’s addressable market – and lead to a potential decade or more of exceptional growth.

Again, I do question whether that growth is priced in, with SQ trading at ~about 12x the company’s 2018 guidance for “adjusted” revenue. But if — again, like AMZN — Square stock can combine a high multiple with consistent, impressive, expansion, it has the path to create substantial value for shareholders over the next five to 10 years.

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5 Stocks That Could Be the Next Amazon Stock: Shopify (SHOP) 5 Stocks That Could Be the Next Amazon Stock: Shopify (SHOP)Source: Shopify via Flickr

E-commerce provider Shopify Inc (NYSE:SHOP) probably doesn’t have quite the same opportunity for expansion as Square. And it too has a hefty valuation, along with a continuing bear raid from short seller Citron Research.

But I’ve remained bullish on SHOP stock — and here, too, a recent pullback presents a buying opportunity. Shopify is dominant in its market of offering turnkey e-commerce services to small businesses. That’s exactly where consumer preferences are headed: small and unique over large and bland. And because of offerings like Shopify (and Amazon Web Services), those small to mid-sized businesses can compete with the giants.

Meanwhile, Shopify does have the potential to expand its reach. Just 29% of revenue comes from overseas, a proportion that should grow over time. It’s moving toward capturing larger customers as well through its “Plus” program, picking up Ford Motor Company (NYSE:F) as one key client. The development of an ecosystem for suppliers and the addition of new technologies (like virtual reality) give Shopify the ability to offer more value to customers — and to take more revenue for itself.

Like SQ, SHOP is dearly priced. But both companies have an opportunity to grow into their valuations. And given long runways for Shopify’s adjacent markets, it should keep a high multiple for some to come. As a stock, if not quite as a company, SHOP has a real chance to follow the AMZN formula for long-term upside.

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5 Stocks That Could Be the Next Amazon Stock: Roku (ROKU) 5 Stocks That Could Be the Next Amazon Stock: Roku (ROKU)Source: Shutterstock

Roku Inc (NASDAQ:ROKU) might have the best chance of any company in the U.S. market to follow Amazon’s strategic playbook. The ROKU stock price is a concern: I wasn’t thrilled about the price after a huge post-earnings gain back in November, and even near a five-month low ROKU isn’t close to cheap.

But — perhaps even moreso than Square — Roku now isn’t what Roku is going to be in ten years. The hardware business is a loss leader, but one that allows Roku to serve as the gateway to content for millions of customers. As the company pointed out after Q4 earnings, it’s already the third-largest distributor of content in the U.S. The Roku Channel is seeing increasing viewership. The company offers pinpoint targeting of advertisements — without the messy data problems afflicting Facebook, Inc. (NASDAQ:FB).

Roku is becoming increasingly embedded in TVs, though a deal between Amazon and Best Buy Co (NYSE:BBY) raised some fears about those software efforts going forward. It has a plan to roll out home entertainment offerings like speakers and soundbars, creating a long-sought integrated experience. It could even, as it grows, look to develop or acquire content itself, positioning Roku not as just a conduit to Netflix, Inc. (NASDAQ:NFLX) but a rival.

The bull case for Roku stock is that its players are like Amazon’s books — a way to garner customers and get a foot in the door of the exceedingly valuable media business. What Roku does now that it has entered will determine the fact of ROKU stock. But the amount of options and a reasonable valuation (Roku’s market cap is barely $3 billion) mean that betting on its strategy could be a lucrative play.

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5 Stocks That Could Be the Next Amazon Stock: Nvidia NVIDIA Corporation Stock (NVDA) Won't Stay Down Long After Shocking Analysts Source: Shutterstock

In the context of the stocks chosen here, Nvidia Corporation (NASDAQ:NVDA) doesn’t seem particularly expensive. But in the context of the traditionally cyclical — and low-multiple — semiconductor space, a ~34x multiple to 2018 consensus EPS estimates, even backing out net cash, is awfully pricy.

And with NVDA up a whopping 1,550% in just the past five years, investors would be forgiven for thinking the run might come to an end. Indeed, NVDA stock hasn’t really moved over the past four-plus months.

But the huge amount of secular tailwinds behind Nvidia suggest that the company should be able to drive torrid growth for years to come – and to maintain a multiple that looks rather high on a historical basis. The company’s automotive business gets a fair amount of press, given its potential applications to autonomous driving. But that growth likely won’t come in earnest until the next decade.

It’s the datacenter business that looks most appealing in the near term. Revenue in that category more than doubled in 2017. Thanks to cloud providers like AWS, demand should continue for years to come. And with Nvidia taking share from Intel Corporation (NASDAQ:INTC), its growth should be even better than that of the market. High-end gaming demand should rise, and virtual reality will add another tailwind there.

Unlike, say, Roku (or early-days Amazon), Nvidia’s growth opportunities are mostly known. But at $223, even with a high multiple, they’re not fully priced in. I still see an easy path to $250 for NVDA in the near term. Longer-term, its presence (if not outright dominance) of key markets should lead Nvidia stock to double, at least.

As of this writing, Vince Martin has no positions in any sec

More Big Companies Beat Projections, But Wall Street Appears To Still Struggle

Companies keep churning out impressive earnings, but the market doesn’t seem to give them much credit. Instead, fear and caution remain the watchwords as the Dow Jones Industrial Average ($DJI) enters Wednesday on a five-session losing streak.

Morning Earnings Wrap

Boeing Co (NYSE: BA) became the latest member of the $DJI 30 to smash Wall Street analysts’ projections early Wednesday, firing up earnings per share of $3.64 vs. analysts’ consensus of $2.56. Revenue of $23.38 billion was more than $1 billion ahead of the $22.2 billion analysts had expected, and the company also raised its outlook. Strength in the commercial air division helped BA project a healthy sales picture.

Also on the earnings front, Twitter Inc. (NYSE: TWTR) topped analysts’ earnings projections and reported the second profitable quarter in the company’s history. It also handed out some bullish guidance and said daily active users grew 10 percent. The tech reporting season continues after the close when Facebook (FB) presents its Q1 results and tomorrow with Amazon.com, Inc. (NASDAQ: AMZN) and Microsoft Corporation (NASDAQ: MSFT).

It’s unclear whether any of the earnings momentum will spill into stocks today as the futures market came under pressure before the opening bell. Stocks overseas followed the U.S. lower after Tuesday’s big sell-off, with a key European index down about 1 percent.

Market Psychology Ruling the Day?

The hunt for 3 percent ended Tuesday as the 10-year yield reached that benchmark level. Soon after, stocks started to take a beating and sharply reversed early gains. At one point, the $DJI stumbled more than 600 points before recovering about one-third of those losses by the end of the day. Concerns about higher borrowing costs and rising commodity prices may be playing into the pressure.

Wall Street also appears to be grappling with a few psychological issues. Most notably, there’s trepidation around that 3 percent yield number, which didn’t hold for long Tuesday but remains within close range.  It definitely seems to be hurting the home builders, whose shares sold off despite strong housing and consumer confidence data this week. The fear is that some people might hear about higher rates and decide not to buy a house after all. Home builders are dealing with something that’s more of a psychological factor than a reality factor, as “3 percent” was made out to be the boogeyman of the markets. Historically, though, it’s not all that high.

Another psychological element is the idea touted by some analysts about earnings starting to peak. This might have been exacerbated by Dow component Caterpillar Inc. (NYSE: CAT) post-earnings conference call in which executives described the Q1 as a “high water mark.” Despite what some analysts called “phenomenal” earnings from the big machine maker, CAT shares fell more than 6 percent. Here we see the power of a conference call. This stock was higher before the call, but the remark led to immediate selling as some investors seemed to interpret the language as CAT saying it can’t get any better than this. However, the remark might not have come out as the company had intended.

More proof that one negative metric can hold back a big company’s stock surfaced with Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL) Tuesday. Though the company reported a powerful quarter, the stock got stuffed as investors and analysts seemed focused more on higher-than-expected capital expenditures.

The "P" and the "E" in P/E

What it all comes down to is a certain level of confusion, which could hang around for a while. There seems to be a repricing of equities going on and despite this being an incredible earnings season so far, stock prices keep going down. The price-to-earnings (P/E) multiple remains a key factor to watch. “E” keeps getting higher and “P” keeps getting lower. People just don’t seem to be inclined to pay the same “P” any longer. It’s unclear where this might go, and sometimes these things take six to 12 months to sort themselves out. We’re right in the middle of it now.

Anyone looking for a silver lining might want to check out how VIX, the market’s most closely watched volatility indicator, acted during the last hours of the day. If you look closely, you’d see that it pulled back a bit in the last part of the session from intraday highs above 19.

Next Up: Autos

Attention could shift to the automotive sector when Ford Motor Company (NYSE: F) reports after the close today and General Motors Company (NYSE: GM) issues results before the open Thursday. There’s a truckload (pardon the expression) of things to consider ahead of not just these two behemoths but also Tesla Inc. (NASDAQ: TSLA), which according to the company’s web site reports May 2.

First, Ford is embarking on a huge program to save $14 billion, but, like all car companies, faces pressure to ignite its research and development (R&D) efforts to keep up with advances in electric and autonomous cars. At this point, F, which has lower margins than GM, is actually spending more money on R&D than its Detroit counterpart. Anyone who’s long F should consider listening to the company’s earnings call to see if there’s more clarity on where those savings might come from, and what they’re going to chop if it’s not R&D. At this point, one school of thought suggests that F is spending too much and not getting enough bang for its buck, but perhaps we’ll learn more Wednesday.

A question for GM, and maybe the U.S. auto industry as a whole, is what’s happening in China. Not long ago, 50 percent of GM’s revenue came from China, but now that’s below 40 percent. The company has closed some plants there. Is the Chinese market not growing at the pace we thought, or is Buick getting less popular over there? It seems unlikely that the latter would be true, so perhaps there’s something about the former that GM might address in its call, and, if that’s the case, might be something other U.S. car companies also have to address.

TSLA doesn’t report until next week, but there may be questions for the company about its own R&D after an analyst note came out recently speculating about TSLA’s development costs. Some analysts doubt if TSLA can achieve the Model 3 production it’s promised in the time frame the company has forecast. TSLA announced two temporary Model 3 plant shutdowns last week but said the shutdowns had been planned.

Though TSLA’s cars don’t need it, crude oil comes under a microscope this week as President Trump holds meetings in the White House with French President Emmanuel Macron. The Iran nuclear agreement is a key topic.

chart_4_251.jpg FIGURE 1: HOW THINGS CHANGE. The tech sector (candlestick) and financial sector (purple line), mapped here over the last year, led the charge through much of 2017 and right into the first month of 2018. Since then, these two former leaders have seemed to lose their way, and that’s one possible reason the market lacks direction.  Data source: S&P Dow Jones Indices. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.

Buyers Pay Up in Chicago

Some call Chicago, “The most American city.” That may or may not be the case, but the city’s real estate market in March seemed to reflect some of the broader American trends in housing. Existing home prices rose more than 5 percent nationwide last month, and in the city of Chicago prices hit an all-time high median of $314,000, according to Illinois Association of Realtors. That was up more than 6 percent from a year earlier. However, total sales around the country fell more than 1 percent year-over-year, and Chicago’s market also saw less turnover, with the number of sales falling more than 10 percent. In sum, Chicago seemed to be a microcosm of a housing market characterized by rising prices and falling supplies. That might sound like a good opportunity for home builders, but rising mortgage rates raise question marks.

ECB Up Next

One thing that’s arguably helped hold back U.S. yields is lower yields in Europe and Japan. However, the European Central Bank (ECB) has been removing some stimulus and meets again this week. An update is due Thursday morning. The Bank of Japan (BOJ) seems inclined to stay put with its current accommodation, BOJ Governor Haruhiko Kuroda told CNBC in a recent interview, saying “risks are skewed to the downside” in Japan’s economy. 

GDP Time Already?

Earnings grab most of the headlines this week, but don’t forget to watch Friday for the government’s first read on Q1 gross domestic product. The report is due out before the opening bell and could give investors a sense of whether the economy continued its solid run that started in Q2 of last year. The consensus among analysts is that things slowed down a bit between January and March, to around 2.1 percent, Briefing.com said. That’s down from the final Q4 read of 2.9 percent, which marked the third-consecutive quarter of growth around 3 percent. Typically, GDP is closely watched but doesn’t tend to move the market unless it comes in well above or below expected levels. The government does get two more cracks at the ball, so this isn’t the final word.

Information from TDA is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade.

The Key to Amazon.com, Inc. Stock is Company Culture

Amazon.com Inc. (NASDAQ:AMZN) doesn’t even have to release its earnings to make the news. The scope of Amazon is now so broad and so deep that even a minor stirring in the water is enough to generate company news.

On Wednesday, company CEO Jeff Bezos released his annual shareholder letter. It’s actually a short, yet critically important, read. It describes some fundamental essentials about Amazon’s corporate culture which is one of the reasons why the companies become so successful. Whether you are an AMZN stock owner, or are considering becoming one, there are few things from the letter that I think deserve to be highlighted.

The Letter

Bezos attributes the AMZN stock success to having high standards, but he asks an important question as to whether high standards are “intrinsic or teachable.” He believes the latter, and I heartily agree. Motivated individuals, and even unmotivated individuals, will often rise to a higher call. I myself had a high school teacher who demanded the very best, and lifted many failing math students and made them into B students are better.

We often hear the term “step up” in reference to second-string professional athletes. I’ve certainly seen many creative artists constantly improve the quality of their content because they strive to make it better. There is simply no denying that Amazon has set very high standards within the company, and it is obvious in every way when you interface with the company as a consumer.

Bezos points out that “unrealistic beliefs on scope kill high standards.” This comes down to internal corporate communications. As a communications professional, I can’t tell you the importance of properly communicating what a path to success looks like. Hard work isn’t enough. You must communicate the company vision and establish realistic and attainable goals, often achieved in steps, for your employees. Clearly, Amazon has this down.

Bezos talks about some other concepts, but he points out some of the milestones that Amazon has achieved recently, which I believe are directly attributable to these elements of company culture.

Company Culture Leads to Company Achievements

Amazon Prime now has over 100 million paying members. This is simply extraordinary. That’s more members than even Costco Corporation (NASDAQ:COST) has. At $99 a pop (the typical cost of a membership), that means Amazon is generating $10 billion a year without even lifting a finger.

Amazon Web Services is generating a run rate of $20 billion annually. Active users increased by 250% last year alone.

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I was frankly amazed to discover that more than half of the units sold on Amazon worldwide are now from third-party sellers. 300,000 domestic small- and medium-size businesses began selling on Amazon last year. 40 million items were purchased from them on Prime Day alone.

Alexa now has 30,000 skills from outside developers, and controls more than 4,000 home devices. Amazon Echo, the Fire Stick, Prime Video and Music Services continue to grow robustly.

Anecdotal reports are that the Whole Foods Market integration has not been going terribly well. I can say that, from my own experience, the stores in my area have been reorganized, revamped, are much more brightly lit and feel stocked with more product than before.

Meanwhile, even as reports dribble in that working conditions at Amazon aren’t terribly great, Amazon now employs some 560,000 people.

Bottom Line on AMZN Stock

What does this mean as far as AMZN stock is concerned? Behind every great company is a great company culture. Amazon seems to have always had a vision under its CEO. At the mid and upper levels, it appears that this vision is being properly communicated to employees.

All of this bodes well for the company’s future. If Amazon can extend this team culture down to the lowest level employee, much as Southwest Airlines (NYSE:LUV) has done, it could only be a good thing for the stock going forward.

Lawrence Meyers is the CEO of PDL Capital, a specialty lender focusing on consumer finance and is the Manager of The Liberty Portfolio at www.thelibertyportfolio.com. He does not own any stock mentioned. He has 23 years’ experience in the stock market, and has written more than 2,000 articles on investing. Lawrence Meyers can be reached at [email protected]