It would be easy to write about all the reasons to be impressed by Amazon. Whether it be their globally leading cloud-computing business, their e-commerce platform which continues to dominate the online retail space whilst taking share from traditional bricks and mortar operations, or their Prime product with its various benefits aimed at growing shopper loyalty and increasing customer retention.
What is harder to write about are the reasons to be concerned about Amazon. Where investors had previously focussed on margin concerns, they have now shifted to the slowing revenue growth in North America.
Recent results have shown a slowing top line in their most mature region (albeit still >20% growth) but with good improvements in the operating margin. The bears will say that these results are a first sign of moderation in Amazon’s top line, the bulls might put this down to a shift in emphasis from revenue to profit growth.
Regardless of either of these points, we would still note a growing penetration rate of e-commerce in retail sales globally which could offer a structural runway for Amazon for some time to come.