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Sunday, December 4, 2022

Amazon has $1 trillion of untapped value, Third Point’s Dan Loeb argues (NASDAQ:AMZN)

Noah Berger/Getty Images Entertainment

Activist investor Dan Loeb of hedge fund Third Point believes that Amazon has a about $1 trillion of untapped value between its e-commerce business and its Amazon Web Services cloud unit.

Loeb made the comments on a call to the hedge fund’s investors today that discussed the fund’s 2021 performance, according to a WSJ report. There was no indication that Loeb was going to start an activist campaign with the e-commerce behemoth.

AWS has an enterprise value of more than $1.5 trillion, similar to company’s current market cap of $1.6 trillion, the WSJ said, citing a slide from the call. Amazon’s retail business may be worth about $1 trillion.

Third Point has a stake in Amazon valued at about $784M, according to a 13F filing from earlier this week. Third Point disclosed in its 4Q letter today that it “significantly” increased in its position in Amazon after the company lagged tech peers for most of last year.

“It’s not often that you get to buy shares in a high-quality company at the low end of its valuation range ahead of a meaningful reacceleration in growth at a 30%-40% discount to its present intrinsic value with an almost unlimited runway of potential to compound in value,” Loeb wrote in the letter.

Loeb added “Amazon’s most recent quarterly results bolstered our view that the company is now at an inflection point that should usher in an improvement in various metrics, as well as an upturn in the company’s share price.”

Loeb’s Third Point flagship Offshore Fund fell 5.3% in Q4 and gained 22.7% for the year.

The top five winners for the quarter were Rivian Automotive (NASDAQ:RIVN), Cie Financiere Richemont SA (OTCPK:CFRHF), Pacific Gas & Electric Co. (NYSE:PCG) Intuit (NASDAQ:INTU) and Accenture (NYSE:ACN). The top five losers for the quarter were Upstart Holdings (NASDAQ:UPST) Prudential PLC (NYSE:PUK), Paysafe (NYSE:PSFE), The Walt Disney Co (NYSE:DIS) and Restoration Hardware (NYSE:RH).

Also see SA contributor Bradley Guichard piece from late October entitled “Amazon: Time To Spin Off AWS.”


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