1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Shareholders: 254
Amazon.com, Inc. (NASDAQ:AMZN) has expanded far from its e-commerce roots to become one of the most diversified companies in the world. The company now has its hands in everything from online streaming, book publishing, and cloud services, to electronic devices, co-branded credit cards, and advertising.
Amazon’s advertising business was one of the company’s strongest performers during a difficult Q2, growing by 18%. Amazon’s Web Services also continues to grow at a rapid pace in the burgeoning cloud computing market, growing by 33% year-over-year in Q2. Amazon is expected to surge its revenue by 15.5% to nearly $128 billion.
Amazon.com, Inc. (NASDAQ:AMZN) is the second-most popular individual stock among hedge funds even after ownership of the stock dipped by 10% over the past two quarters. Some of Amazon’s biggest bulls loaded up on shares during the stock’s Q2 weakness, with Ken Fisher’s Fisher Asset Management growing its stake by 1,959% to 48.6 million shares during the quarter, while Jaime Sterne’s Skye Global Management raised its position by 1,982% to 15.4 million shares.
Lakehouse Capital discussed Amazon.com, Inc. (NASDAQ:AMZN)’s resilient Q2 in the face of various headwinds, as well as the company’s long-term growth outlook in the fund’s July 2022 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) proved resilient in the face of ongoing macro pressures and delivered a strong quarterly result along with “better-than-feared” guidance for the third quarter. Net sales increased 7% year-on-year (10% constant currency) to $121.2 billion, while operating profit declined 57% to $3.3 billion. The drop in operating profit was attributable not only to external macro factors, such as elevated shipping and fuel costs, but also lower productivity and efficiency costs as a result of some overcapacity on the back of its recent investment cycle. It was pleasing to see that the company has begun to make progress on the more controllable costs, particularly productivity and staffing, with headcount, for example, down almost 100,000 over the quarter. We continue to believe Amazon is well positioned to manage these short-term issues and remains on track to deliver significant profit improvements over the next twelve months.
Management also confirmed that they have not seen any deterioration in Prime membership growth or retention following the 17% increase in Prime fees put through earlier in the year. This is not surprising to us, as in our view, the price increase was more than justified given the tremendous amount of customer value that has been added since the last price increase was implemented back in 2018, which includes the doubling of its fulfilment network and workforce, significant expansion of free same-day delivery and considerable investments in video and music content. Ultimately, we remain positive about Amazon’s future and believe that the company’s scale and market leadership will continue to drive growth for many years to come.”
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