Amazon a flamboyant company
Warren Buffett’s conglomerate ‘Berkshire Hathaway’ has recently disclosed a surprise. ‘Berkshire Hathaway’ just bought 483,300 shares of worth about $904 million in Amazon, the tech giant. When Berkshire Hathaway makes an investment of this volume, it definitely makes big news. So what makes Amazon so special? Are they impressed with Amazon investments?
Amazon is like that high profile Hollywood celebrity who does everything; in style. The celebrity holds a huge fan following and he is often foul mouth. He has money but makes a lot of noise with his flashy lifestyle. The celebrity is workaholic and he commits mistake also. He spends a lot recklessly on something he doesn’t understand much, gets trolled but comes out with money from it.
Amazon investments: on a buying spree?
The spending scales of Amazon have been to the extent that Apple’s Tim Cook criticized Amazon investments for its (in his view) senseless spending. Amazon has been investing heavily over the past year in some of the areas which are completely uncharted for it. In them, transportation and logistics are on topmost priority. The Amazon investments are something of a scale as if there won’t be another day.
Not many would agree but Amazon is feeling the heat of competition and thinning profit is a wake-up call for this tech giant. Is the writing on the wall is clear to Amazon for changing its core business? The diversification in Amazon investments implies something about it.
The most promising niche Amazon see is Logistics and transportation. In the year 2018, in addition to focusing on delivery business, Amazon has invested billions of dollars on half of a dozen companies.
Undeterred with slow numbers
The spending spree is non-stop as Amazon has been serving up big profits despite slowing revenue growth. Even though the company has a relatively decent first quarter of 2019 in terms of revenue growth, Amazon hasn’t been hesitant about spending on new investment possibilities. Though the company reported a huge jump on earnings in the first quarter of 2019 at $7.09 per share, Amazon saw revenue growth slowed by 17% across the board to last year quarter.
Amazon’s mainstay of generating profit is by and large; Amazon Web Services (AWS). Even though Microsoft’s Azure has a major chunk on AWS profit these days, Amazon Web Services still remains the major profit contributor for Amazon. The company’s growth is attributed to its cloud business; Amazon Web Services (AWS), which has become a major profit driver for the company. In the first quarter of 2019, AWS revenue represented 13% of total sales for Amazon. But the problem is that even AWS has also undergone a growth deceleration by 49% in comparison to last year.
But that is Amazon!! These hold up have not been able to deter the spirit of Jeff Bozos. The company doesn’t seem affected by these letdowns. In June 2018, they acquired PillPack, an online pharmacy company. PillPack delivers medications in packets that remind consumers when they are to take medicine, expanded Amazon’s delivery prowess into a new vertical.
Amazon investments of millions of Dollars is a strategic expansion plan and futuristic growth for the company. Here are some of the Amazon investments in recent times.
Amazon Air: A key factor of Amazon investments
Amazon was already operating in the sky with their Amazon Prime Air to meet up transportation and logistics operations. Later they rebranded Amazon Prime Air as Amazon Air to avoid confusion with the Amazon Prime Air drone delivery service. Amazon is expanding Amazon Air to include 50 planes and new regional hubs. These aircraft are mostly on lease and will help the company reduce its reliance on third-party shippers such as UPS and FedEx.
Amazon CEO Jeff Bezos’ interest pet project to set up a network of more than 3,000 satellites to expand high-speed internet access worldwide to provide internet-based services.
Amazon HQ2: Investment in the business hub
It is a planned new corporate headquarters project, for Amazon. The location is complementary to the company’s existing headquarters in Seattle, Washington. It was planned such a way that it will house 50,000 workers and spend $5 billion on new construction. Additionally, one Operations Center of Excellence in Nashville and 17 new corporate offices are in pipeline.
Aurora: Amazon investment in futuristic vehicles
Future of the mode of transport is full of excitement with innovations coming up every day. Self-driving car start-up project Aurora is another brainchild Amazon has an interest in. Amazon spends huge money on delivery costs. With something remarkable like this can dramatically cut down its delivery cost which it is at present paying to any third-party delivery company.
Just when Amazon concluded Aurora deal, Amazon investments are onto another venture to further cut down the delivery cost. Rivian is an electric truck start-up and ready to take up long with rival Tesla in this domain of electric vehicles.
It is Amazon’s latest investment in the UK -based food-delivery company Deliveroo. Amazon investments show the company’s ambitions in the food delivery domain in a market where Uber Eats is already an established player.
Berkshire Hathaway call on Amazon investments is a well-calculated move. Amazon is at the moment, unstoppable and in the long run, it is a sure shot bet.