Amazon faces a profitability headwind from e-commerce, says D.A. Davidson's Tom Forte
BELL THE LATEST MEGACAPS TO REPORT IN A WEEK OF DISAPPOINTING RESULTS FROM THESE MAJOR TECH PLAYERS. TOM FORTE JOINS US TO SHARE WHAT HE’S WATCHING. JUST LAST WEEK, REITERATED A BUY RATING ON APPLE AND AMAZON TOM, WHICH DO YOU PREFER WHICH WOULD YOU RATHER >> I PREFER APPLE. THE CHALLENGE FOR AMAZON IS CONSUMERS ARE CLEARLY SPENDING THEIR MONEY. JUST NOT SPENDING ON ECOMMERCE THEY’RE SPENDING IT ON TRAVEL. OF THE TWO, I WORRY FOR BOTH THEY HAVE A HIGH PROPORTION OF THEIR SALES COMING IN U.S. DOLLAR SO I THINK THERE’S A POSSIBILITY OF ONE OR BOTH
WOULD MISS ON THE TOP LINE GIVEN THE STRENGTH YOU SEE IN THE U.S. DOLLAR THE BENEFIT FOR APPLE IS WITH THE SUPPLY CHAIN IMPROVEMENTS WE’VE SEEN THIS YEAR VERSUS LAST YEAR, THEY SHOULD BE ABLE TO HAVE MORE AND BETTER SALES OF iPHONE 13 THEN FOR AMAZON, THEIR CLOUD COMPUTING BUSINESS IS DOING WELL THEIR ADVERTISING BUSINESS IS GROWING, BUT I’M CONCERNED THEY DECIDED TO HAVE A SECOND PRIME DAY IN ONE CALENDAR YEAR I THINK THAT’S A REMINDER OF HOW WEAK ECOMMERCE SALES ARE SO OF THE TWO, I WOULD LEAN TOWARD APPLE >> THE STOCKS HAVE SOLD
OFF IN REACTION TO ALPHABET, TO META. IS THERE ANY REAL CORRELATION BESIDES MAYBE JUST OWNERSHIP, HEDGE FUND POSITIONING, THAT SORT OF THING, WHERE YOU CAN EXTRAPOLATE WHAT
YOU HAVE AN INVESTOR BASE RIGHT NOW, BECAUSE OF EVERYTHING GOING ON IN THE OTHER COMPANIES, THAT IS ACUTELY FOCUSED ON RETURN ON INVESTMENT, LET’S RETURN A TIGHTER SHIFT. AMAZON HAS BEEN MOVING IN THAT DIRECTION IN RECENT QUARTERS OF TRYING TO ESSENTIALLY SAY WE OVERINVESTED, WE’RE TAKING A LITTLE BIT MORE OF A SHARP PENCIL TO EXPENSE. WE’LL SEE IF THAT THEME RUNS THROUGH HERE IN ADDITION TO THE OBVIOUS CONCERNS ABOUT WHETHER CLOUD DEMAND IS FLAGGING AND NOW THE CONSUMER IS BEHAVING THE FACT THAT APPLE NUMBERS HAVE NOT REALLY CHANGED VERY MUCH THE FORECAST IN MONTHS, I
THINK IS KIND OF INTERESTING PEOPLE ASSUME IT’S GOING TO BE STABLE WE’LL SEE IF THAT COMES THROUGH. IT’S PROBABLY GOOD IT’S DOWN 3% IN THE STOCK HEADING INTO THAT NUMBER >> I WAS JUST GOING TO ASK, TOM, WHERE EXPECTATIONS ARE MISMATCHED IN TERMS OF REALITY BECAUSE THE EXPE EXPECTATIONS A THAT THE BUSINESS WOULD SLOW AS WELL AS IN CLOUD AND ADVERTISING. I DON’T KNOW IF THEY’VE MOVED THIS MUCH FOR APPLE. >> IT’S A GREAT QUESTION IF YOU LOOK AT THE MULTIPLES FO BOTH, THEY’VE COME DOWN QUITE A BIT. WE’D EXPECT TO RALLY IF EITHER CAN
SAY ANYTHING THAT’S ANYTHING GOOD BUT I DO THINK THAT THE WEAKER ECOMMERCE FOR AM SAZON H
