4. Amazon.com, Inc. (NASDAQ:AMZN)
Value of Soros Fund Management’s 13F Position: $224 million
Number of Hedge Fund Shareholders: 272
Soros Fund Management trimmed its stake in Amazon.com, Inc. (NASDAQ:AMZN) by 2% during the third quarter, owning over 1.98 million shares of the ecommerce giant at the end of Q3. Amazon has consistently ranked among the five most popular stocks among hedge funds over the last seven years. Several prominent money managers have billion-dollar stakes in AMZN, including Ken Fisher, Warren Buffett, and Ken Griffin.
Amazon.com, Inc. (NASDAQ:AMZN) shares plunged by nearly 50% in 2022 but could be poised for a big bounce back in 2023 should the expected recession not prove as deep as anticipated. As noted in the first part of the article, Alphabet Inc. (NASDAQ:GOOG) and Meta Platforms, Inc. (NASDAQ:META) have been losing some of their share of the digital ad market, with Amazon being one of the companies eating into it. AWS growth could also reaccelerate in a more positive business environment.
Perhaps most importantly, the profitability of Amazon’s core ecommerce business should improve in 2023 given moderating inflation, lower fuel costs, and the heavy lifting of bolstering its fulfillment network now behind it.
Farnam Street Investments quoted Amazon.com, Inc. (NASDAQ:AMZN) CEO Jeff Bezos in its Q3 2022 investor letter:
“Change doesn’t just impact investors. Business people also bet for or against change. Jeff Bezos was once asked this exact question:
“You can build a business strategy around the things that are stable in time. It’s impossible to imagine a future ten years from now where a customer comes up and says, ‘Jeff, I love Amazon, I just wish the prices were a little higher.’ Or, ‘I love Amazon, I just wish you’d deliver a little slower.’ Impossible. So we know the energy we put into these things today will still be paying off dividends ten years from now. When you have something you know is true, you can afford to put a lot of energy into it.”
A lot of energy… and more than $172 billion in capital expenditure in the last fifteen years.
Deeper, slower moving layers turn exponential growth into “S-curves.” A rapidly dividing bacteria crashes into the resource-wall of its Petri dish. Nineteenth-century commercial robber barons were smacked by the governance layer of the Sherman Antitrust act. Amazon (NASDAQ:AMZN) Prime free shipping leaned on the creaking infrastructure of the U.S. Postal Service until it was forced to invest in its own infrastructure (all those delivery vans you see driving around).
Hopefully, next time you’re thinking about change, you can recall pace layers as a helpful construct to understand how successful systems change.
