AMZN Projects Huge New Revenue Stream & Why I Think The Stock is Still Cheap
Summary
Daniel begins by addressing market euphoria, exemplified by the 'Bird' (Allbirds) stock's over 600% surge after announcing a pivot from shoe-making to AI infrastructure. He critically analyzes this move, drawing parallels to historical market bubbles like the 2017 'Long Island Iced Tea' company's shift to blockchain, which ultimately failed. Daniel highlights Bird's dire financial state—a 99.5% stock decline since IPO, continuous revenue and cash flow drops, and insufficient cash to cover upcoming liabilities—suggesting the AI pivot is a 'Hail Mary' play for a business on the brink of bankruptcy. He warns investors to avoid such speculative ventures.
Conversely, Daniel expresses strong bullish sentiment for Amazon and Meta, which he believes are still undervalued despite recent rallies.
Mentioned Stocks
Reasoning: Daniel is very bullish on Amazon, particularly its Project Kuiper (LEO satellite network). He highlights a significant new partnership with Apple to provide satellite services to iPhones and Apple Watch, seeing it as a game-changer for safety and connectivity in remote areas. He points to internal projections of Project Kuiper generating $20 billion in annual revenue by 2030, establishing a major new revenue stream with limited competition. Despite the stock being near all-time highs, Daniel believes it is still undervalued and trading below fair value, as its strong fundamental growth has outpaced its share price appreciation in recent years. He remains a long-term shareholder and is considering buying more.
Reasoning: Daniel views Meta as a clear beneficiary of artificial intelligence. He details Mark Zuckerberg's vision for AI to transform Meta's advertising platform into an 'ultimate business results machine' by automating ad creation and targeting, leveraging Meta's vast consumer data. This, he argues, will expand Meta's moat and increase advertisers' return on ad spend. Additionally, he highlights the future monetization of WhatsApp through AI agents for customer service and sales as a significant new revenue pillar. Despite a recent rally, Daniel asserts that the stock is still undervalued, dismissing anchoring bias and noting that it's currently cheaper than where he happily bought shares at $700 previously. He believes Meta is a fantastic business poised to deliver market-beating returns.
Reasoning: Daniel views Bird's pivot from shoe-making to AI infrastructure as a 'Hail Mary' play for a business that was on the verge of bankruptcy. He highlights its extremely poor financials: a 99.5% stock decline since IPO, declining revenues and cash flows, negative operating margins, and insufficient cash to cover $40.6 million in liabilities due within the next year, while burning $55 million annually. Daniel compares this speculative move to past market bubbles (e.g., Long Island Iced Tea's failed blockchain pivot) and warns against it as 'pure gambling,' stating he will be staying away from it.