Loup Ventures

About the Author Loup Ventures

At Loup Ventures, research is in our blood. The spirit of our team has always lived on the curiosity to discover new insights that yield investment opportunities. For years we did this on Wall Street, focused on public tech companies. Now we invest in private frontier tech companies, but public companies like Tesla, Nvidia, and others are also meaningful innovators in frontier tech. These public companies are shaping the emergence of AI, robotics, autonomous vehicles, and AR/VR just as much as early stage startups. As a result, we’ve always kept a watchful eye on public market participants to inform our private investment strategy. Gene Munster is a managing partner and co-founder at Loup Ventures. Prior to Loup Ventures, Gene was a managing director and senior research analyst at Piper Jaffray where he covered technology companies including Apple, Amazon, Google and Facebook. During his 21-year tenure, Gene received many acknowledgements including: Top Stock Picker from Forbes, Best on the Street from The Wall Street Journal, and was widely recognized for his work on Apple. Gene holds a bachelor’s degree in finance and entrepreneurship from University of St. Thomas.

Amazon (AMZN) Flywheel Moving at Full Speed

By Gene Munster

Amazon (NASDAQ:AMZN) has reached a $1 trillion market cap for two reasons. First, the company has a relentless focus on “delighting the customer.” Second, Jeff Bezos has investor support to run Amazon for the long-term at the cost of near-term profitability, allowing the company to explore new disruptable markets.

  • Retail. Over the past 11 years, unit growth has averaged 31% y/y and will likely finish slightly above 20% in CY18. This is evidence that the Amazon flywheel is moving at full speed. The company still has a massive opportunity to capture consumer wallet share over the next 10 years. They’ll do this by increasing online retail selection and delivery speed through improved logistics and by expanding into grocery, healthcare, video, gaming, and brick and mortar retail.
  • AWS is riding two waves: the secular shift to corporate cloud and increased defensibility as developers standardize on the platform.
  • Advertising has been a surprising piece of the story in the past year, now an $8B, highly profitable business, growing at ~50%.
  • The Stock. Revenue (growing at an average of 28% for the past 10 years, and expected to grow at 20-30% for the next several) is not a problem. The biggest wild card for AMZN shares over the next 1-2 years is investors’ willingness to accept depressed profitability. While this could weigh on shares in the near-term, we are believers in the Amazon story longer-term (3+ years).


Disclaimer: We actively write about the themes in which we invest or may invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we may write about companies that are in our portfolio. As managers of the portfolio, we may earn carried interest, management fees or other compensation from such portfolio. 

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