Please Stop Comparing Marijuana Stocks to Amazon

According to a report from Arcview Market Research and BDS Analytics, the global cannabis industry generated $12.2 billion in sales last year.

Right now there’s arguably no hotter industry on the planet than cannabis, and it’s been reflected in the valuations of nearly all marijuana stocks. Since the year began, well over a dozen of the most popular pot stocks are up more than 50%.

A quick overview of the industry provides evidence of why marijuana stocks have been unstoppable. In just the past six months, Canada became the first industrialized country in the world to legalize recreational weed; additional U.S. states gave the green light to medical marijuana, pushing the number of states to have legalized in some capacity to 33; and Wall Street analyst coverage has commenced with some lofty price targets.

According to a report from Arcview Market Research and BDS Analytics, the global cannabis industry generated $12.2 billion in sales last year. However, investment bank Cowen Group foresees the industry growing to $75 billion by 2030, with Jefferies seeing an outside opportunity of the industry reeling in $130 billion annually at its peak. At $130 billion, the pot industry would be essentially double the size of the global soda industry. It’s these lofty forecasts, along with triple-digit sales growth, that have investors piling into pot stocks.

A tipped over jar packed with cannabis buds that's lying atop a small pile of cash bills.

Image source: Getty Images.

No, your pot stock isn’t the next Amazon

But there’s just one problem: With the exception of a very small handful of marijuana stocks, they’re nearly all losing money. In some instances, a lot of money. The need to ramp up capacity, build and market recreational or medicinal brands, research new products for adult-use or medical purposes, lay the groundwork to move into overseas markets, or make acquisitions has pretty much doomed every major pot stock to ongoing operating losses. In other words, the industry is a fundamental nightmare.

However, ugly income statements aren’t stopping marijuana stock investors because we’ve supposedly seen this scenario play out before with Amazon.com(NASDAQ:AMZN). Amazon lost copious amounts of money in the late 1990s and throughout the 2000s as it built itself into an e-commerce giant. It continually reinvested a majority of its operating cash flow back into the business in order to emphasize long-term growth over short-term profits. And, as the results show, it did quite well for itself.

This is an argument I run into often with a company like Aurora Cannabis(NYSE:ACB). Through the first six months of fiscal 2019, Aurora Cannabis has lost 192 million Canadian dollars on an operating basis. But because the company has been on an acquisition binge for more than a year now, it’s vaulted into the top spot in terms of projected peak annual production. Yours truly estimates that Aurora Cannabis can produce 700,000 kilos annually at its peak. Thus, the company’s lack of profits and its immense dilution are moot points because Amazon succeeded by reinvesting in itself, and so can Aurora.

But the fact of the matter is that Amazon’s growth story is nothing — absolutely nothing — like what’s going on in the cannabis industry, and comparing marijuana stocks like Aurora Cannabis (or any other prominent name, for that matter) to Amazon has got to stop.

Digital clouds that are connected to various other clouds and mail symbols in the middle of a data center.

Image source: Getty Images.

1. Innovation vs. regulation

To begin with, Amazon was creating something completely new. Prior to the mid-1990s, there was no broad-based internet access of e-commerce. This was an exceptionally fluid space that had avenues that would take time to discover. Even 25 years later we’re witnessing connectivity innovation that’s constantly transforming the internet, cloud-computing, and the face of e-commerce.

By comparison, marijuana has been around, at least as an illicit industry, for a very long time. There’s not much in the way of game-changing innovation going on. It’s merely a tight walk between regulators and retailers of figuring out where the sweet spot exists with regard to taxing legal cannabis in order to drive consumers from the black market into legal channels.

2. There’s a massive gap in market size

Marijuana stock investors who love leaning on the Amazon comparison are also overlooking a huge gap in comparable market size. Even assuming Jefferies’ extremely lofty estimate of $130 billion in annual sales is correct, keep in mind that Amazon is part of a $6 trillion U.S. retail sales industry — and this doesn’t even factor in its cloud-computing service, Amazon Web Services (AWS). According to Gartner, worldwide public cloud service revenue is expected to increase by more than 17% in 2019 to $206.2 billion. And yes, this doesn’t include the sales potential from the private cloud.

So, to summarize, Amazon currently operates in an addressable market of more than $6.2 trillion (not even counting its smaller sales channels), while the marijuana industry can one day hope to maybe hit $130 billion in annual sales.

An Amazon fulfillment employee preparing goods for shipping.

Image source: Amazon.

3. Most pot stocks don’t have multiple sales channels

To build on the previous point, comparing the two industries ignores the fact that Amazon has numerous channels of revenue. Amazon can make money with e-commerce, with AWS, through its Whole Foods subsidiary, by selling its Prime service, and by offering ad services and co-branded credit cards.

Comparatively, marijuana stocks don’t really have many ancillary revenue channels. They can sell a variety of pot products, or perhaps partner with a brand-name beverage, snack, tobacco, or pharmaceutical company. They won’t, however, have the revenue breadth of a company like Amazon.

4. Initial winners may not have staying power

Lastly, the rise of internet e-commerce reminds us that initial leaders aren’t guaranteed to stay there forever. Remember, there was a time when Netscape Navigator was the preferred internet browser, Yahoo! owned the search landscape, and eBay was the e-commerce destination of choice for online shoppers. Change is commonplace within fast-growing industries, and there’s little guarantee that a company like Aurora Cannabis, which looks to be a leader now, is going to remain near the top of the pack.

Long story short, just because Wall Street tolerated ongoing losses from Amazon doesn’t mean they’ll tolerate them for very long from the pot industry. Caveat emptor, investors.

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Company Profile: Shapeways Industry 3D Creators By Lux Capital Management, Stratasys …

Shapeways Inc (Shapeways) is a 3D printing and production service provider. The company’s 3D printing technology helps customers to co-create, …

Shapeways Inc (Shapeways) is a 3D printing and production service provider. The company’s 3D printing technology helps customers to co-create, print, and buy custom-made products. It offers an online platform for 3D creators to display and market their designs to end users.

Key Players:

Lux Capital Management

Stratasys

DyeMansion

Panalpina

Union Square Ventures

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Company Overview

Technology Focus

Product Overview

Partnerships & Funding

Key Employees

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Are You an Amazon or an Apple Family?

It was clear that Amazon was now using artificial intelligence to slowly transform our homes into data generation machines as we, and our daily …

All those devices give us access to bundled entertainment packages and shopping platforms, which rely on our personal and behavioral data. Because our data are managed by one of these companies — companies that also sold us all the A.I.-powered stuff in our homes — we are unwittingly choosing our tribes. Without realizing it, you are already a Google family or an Apple family or an Amazon family.

What does that designation imply for the coming years?

Apple’s products tend to be the priciest, but they also come with the fewest glitches, viruses and bugs. As a result, they are attractive to people with little technical knowledge and a lot of disposable income. Apple’s future smart glasses, smart toilets and custom refrigerators might carry on the company’s long tradition of expensive devices anyone can use right out of the box. The families, wherever they call home, will be living a life optimized by a handful of developers in Cupertino.

Google’s current egalitarian approach to tech could shift to a future tiered system of access and permissions. Families who can afford the upgrade fees and have enough tech savvy could manually unlock their systems and connect to a greater variety of devices, such as coffee makers, 3-D printers and outdoor irrigation systems. But a lower-income tier might offer families access in exchange for advertising. Those families would have a small selection of devices and appliances available, and they would come with restrictions and limited data protections.

Since 2017, Amazon has partnered with Lennar, the largest residential construction company in the United States, to install Alexa in its houses, and there are Amazon homes all over the country: in Sarasota, Fla., in Bucks County, Pa., in Howard County, Md., and in Fresno, Calif. Even in the quiet, blue-collar neighborhood where I grew up in Northwest Indiana, there is now a cluster of Amazon homes that come with smart speakers, door locks and e-keys, video doorbells and thermostats.

Amazon homes come with built-in neighborhood surveillance: Families type in the name of their community to see security camera footage from their neighbors. So it is conceivable that Amazon might one day build smart homes full of its own appliances — not just microwaves — that connect to the Amazon platform.

By choosing Google, Apple or Amazon today, you are also aligning your family values with the values of one of the big tech giants. And soon, you may have to choose — making just one of these companies a custodian of all your family’s data. The unintended consequence of this kind of home automation could be a digital caste system that’s much more daunting than the prospect of making microwave popcorn the old-fashioned way.

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Amazon Com (AMZN) Holder Bellecapital International LTD Has Trimmed Stake as Shares Rose …

2U, Inc. (NASDAQ:TWOU) has declined 17.62% since March 8, 2018 and is downtrending. It has underperformed by 21.99% the S&P500.

Amazon.com, Inc. (NASDAQ:AMZN) Logo

Avalon Global Asset Management Llc increased its stake in 2U Inc (TWOU) by 29.47% based on its latest 2018Q4 regulatory filing with the SEC. Avalon Global Asset Management Llc bought 22,100 shares as the company’s stock rose 22.47% with the market. The hedge fund held 97,100 shares of the technology company at the end of 2018Q4, valued at $4.83 million, up from 75,000 at the end of the previous reported quarter. Avalon Global Asset Management Llc who had been investing in 2U Inc for a number of months, seems to be bullish on the $3.92B market cap company. The stock decreased 0.40% or $0.27 during the last trading session, reaching $67.48. About 345,146 shares traded. 2U, Inc. (NASDAQ:TWOU) has declined 17.62% since March 8, 2018 and is downtrending. It has underperformed by 21.99% the S&P500. Some Historical TWOU News: 26/04/2018 – Baylor University and 2U, Inc. Partner for the First Time on Three Online Graduate Programs; 30/04/2018 – Fidelity Magellan Adds 2U, Exits CVS, Cuts Walmart; 09/05/2018 – John Ellis Joins 2U, Inc. as SVP, Corporate Controller and Chief Acctg Officer; 03/05/2018 – 2U 1Q Rev $92.3M; 03/05/2018 – 2U RAISES YEAR REV. GROWTH GUIDANCE TO 42%; 03/05/2018 – 2U INC TWOU.O – SEES NET LOSS PER SHARE, BASIC AND DILUTED NET LOSS PER SHARE $0.87 – $0.84 FOR FY 2018; 03/05/2018 – 2U INC TWOU.O – SEES FY 2018 REVENUE $406.6 MLN- $410.6 MLN; 02/04/2018 – Pepperdine Law’s Straus Institute for Dispute Resolution Will Offer its Number-One Ranked Master of Dispute Resolution in New, Innovative Online Format; 03/05/2018 – 2U INC SEES FY 2018 NET LOSS PER SHARE $0.87 – $0.84; 11/04/2018 – 2U: Andrew Hermalyn Will Become Pres of 2UGrad

Bellecapital International Ltd decreased its stake in Amazon Com Inc (AMZN) by 7.8% based on its latest 2018Q4 regulatory filing with the SEC. Bellecapital International Ltd sold 322 shares as the company’s stock rose 1.10% with the market. The institutional investor held 3,805 shares of the consumer services company at the end of 2018Q4, valued at $5.72 million, down from 4,127 at the end of the previous reported quarter. Bellecapital International Ltd who had been investing in Amazon Com Inc for a number of months, seems to be less bullish one the $796.14B market cap company. The stock decreased 0.32% or $5.15 during the last trading session, reaching $1620.8. About 4.49M shares traded. Amazon.com, Inc. (NASDAQ:AMZN) has risen 13.57% since March 8, 2018 and is uptrending. It has outperformed by 9.20% the S&P500. Some Historical AMZN News: 27/03/2018 – Coupe Says Sainsbury Service Is Faster Than Amazon (Video); 19/04/2018 – Jeff Bezos is ‘particularly proud’ of this Amazon employee benefit; 05/04/2018 – Cramer talks Spotify, the ‘anti-IPO’ joining the ranks of Netflix and Amazon; 02/05/2018 – Aol, which is under the Oath group, already uses Amazon Web Services; 26/04/2018 – Amazon Raises Annual Price of Prime Service by 20%; 05/03/2018 – Amazon Is Said to Expand Whole Foods Delivery to San Francisco; 08/03/2018 – Is this the future of Amazon? ����; 28/03/2018 – Amazon drops 3% on report Trump wants to ‘go after’ company’s tax treatment; 03/04/2018 – Amazon’s contract with the Postal Service runs out in October and could be a short-term win for Trump; 16/05/2018 – Amazon has visited all 20 finalists for its new headquarters, report says

Investors sentiment increased to 1.55 in Q4 2018. Its up 0.37, from 1.18 in 2018Q3. It increased, as 93 investors sold AMZN shares while 536 reduced holdings. 184 funds opened positions while 793 raised stakes. 371.97 million shares or 42.70% more from 260.67 million shares in 2018Q3 were reported. Beddow Inc, a California-based fund reported 273 shares. Berkshire Asset Pa reported 0.22% stake. National Bank Of Nova Scotia, Ontario – Canada-based fund reported 355 shares. Ftb Advisors Inc stated it has 0.37% in Amazon.com, Inc. (NASDAQ:AMZN). The Florida-based Raymond James Svcs Advsrs has invested 1.18% in Amazon.com, Inc. (NASDAQ:AMZN). Capital Invest Advsr Limited Liability Company owns 0.58% invested in Amazon.com, Inc. (NASDAQ:AMZN) for 5,796 shares. Waverton Invest Mgmt reported 78,580 shares. Roberts Glore And Il reported 842 shares. Kings Point Cap Mngmt has 6,702 shares. Goodwin Daniel L accumulated 305 shares or 0.24% of the stock. Trustees Of Dartmouth College holds 0.04% or 15 shares. Moreover, Capital Advisors Ok has 1.47% invested in Amazon.com, Inc. (NASDAQ:AMZN). Plante Moran Fincl Advsrs Limited Liability owns 1,204 shares or 0.63% of their US portfolio. Eagle Capital Mngmt Limited Liability Com invested 3.81% in Amazon.com, Inc. (NASDAQ:AMZN). Abner Herrman & Brock Lc invested in 2,375 shares or 0.65% of the stock.

Analysts await Amazon.com, Inc. (NASDAQ:AMZN) to report earnings on April, 25. They expect $4.67 EPS, up 42.81% or $1.40 from last year’s $3.27 per share. AMZN’s profit will be $2.29B for 86.77 P/E if the $4.67 EPS becomes a reality. After $6.04 actual EPS reported by Amazon.com, Inc. for the previous quarter, Wall Street now forecasts -22.68% negative EPS growth.

Since September 6, 2018, it had 0 insider buys, and 11 selling transactions for $54.26 million activity. Reynolds Shelley also sold $687,447 worth of Amazon.com, Inc. (NASDAQ:AMZN) on Thursday, November 15. Another trade for 16,964 shares valued at $27.69M was made by BEZOS JEFFREY P on Monday, October 29. 1,726 shares valued at $2.70M were sold by Jassy Andrew R on Thursday, November 15. The insider WILKE JEFFREY A sold 2,000 shares worth $3.96 million. Olsavsky Brian T had sold 2,030 shares worth $3.21 million on Thursday, November 15. Another trade for 181 shares valued at $285,960 was sold by Huttenlocher Daniel P.

Bellecapital International Ltd, which manages about $508.69M and $140.30M US Long portfolio, upped its stake in Alibaba Group Hldg Ltd (NYSE:BABA) by 18,805 shares to 49,159 shares, valued at $6.74M in 2018Q4, according to the filing. It also increased its holding in Yy Inc (NASDAQ:YY) by 5,472 shares in the quarter, for a total of 8,760 shares, and has risen its stake in Ishares Tr.

More notable recent Amazon.com, Inc. (NASDAQ:AMZN) news were published by: Seekingalpha.com which released: “Reports: Amazon, Sinclair, Yankees near buying YES Network for $3.5B – Seeking Alpha” on March 08, 2019, also Seekingalpha.com with their article: “Amazon Moves Forward – Seeking Alpha” published on March 04, 2019, Seekingalpha.com published: “California governor proposes data dividend – Seeking Alpha” on February 12, 2019. More interesting news about Amazon.com, Inc. (NASDAQ:AMZN) were released by: Nasdaq.com and their article: “A Foolish Take: Marketers Are Boosting Their Spending on Amazon’s Ads – Nasdaq” published on February 19, 2019 as well as Investorplace.com‘s news article titled: “Walmart Fights Back at Amazon by Getting Into the Advertising Game – Investorplace.com” with publication date: March 07, 2019.

Amazon.com, Inc. (NASDAQ:AMZN) Institutional Positions Chart

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Amazon’s online data use has been ‘less dangerous’ than Facebook, says tech investor Roger …

But that’s not to say we can count on that going forward,” said McNamee, co-founder of the Elevation Partners private equity firm and co-founder of the …

Amazon needs to articulate its policy around health data — but on the whole so far, the e-commerce giant has done a better job around online privacy than Facebook, tech investor and activist Roger McNamee told CNBC Monday.

“I would say … that the impact of their [Amazon’s] behavior has been less dangerous to this point. But that’s not to say we can count on that going forward,” said McNamee, co-founder of the Elevation Partners private equity firm and co-founder of the Center for Humane Technology.

McNamee was an early Facebook investor and an early advisor to co-founder and CEO Mark Zuckerberg. But since the fallout from Russia‘s activities on the platform aimed at influencing the 2016 presidential election and last year’s Cambridge Analytica scandal, McNamee has really been a critic. (McNamee was also an early investor in Google, the search giant that’s now part of Alphabet.)

McNamee said in his new book, “Zucked: Waking Up to the Facebook Catastrophe,” that the social network “remains a threat to democracy” and continues to “prioritize its business model over its responsibilities.” For its part, on McNamee’s book, Facebook said, “We’ve fundamentally changed how we operate to better protect the safety and security of people using Facebook.”

“I can respect the people without respecting all the things that they do in the business,” McNamee said of Zuckerberg in a “Squawk Alley” interview. And he said the same can be said for Amazon founder and chief Jeff Bezos. “In fact, I’m very, very worried about many of the things that Amazon is doing with data. I do think we need to hold them to exactly the same standard.”

With Amazon entering the health-care industry, in part through a venture with Berkshire Hathaway and J.P. Morgan, McNamee said it’s important that Bezos and company are up-front with how they’re going to treat patient data. The Amazon-Berkshire-J.P. Morgan venture is aimed at figuring out ways to reduce health-care costs for their employees and how that may possibly help cut health-care costs in the United States.

McNamee offered an Amazon hypothetical to underscore his point.

“They’re going to know from your mouse movements if you have a neurological problem before you do. If all of sudden the mouse movements when you’re on Amazon are slowing down or getting more erratic, they are going to know that. Who is their customer in that? Are they going to call you, and say, ‘Hey, we think you need to go see your doctor?’ Or are they going to go to their insurance side and raise your rates or terminate your insurance? I don’t know, but I think we ought to know the answer, and soon.”

Amazon was not immediately available to respond to CNBC’s request for comments on McNamee’s interview.

Earlier Monday, Evercore ISI analyst Anthony DiClemente said Amazon shares still look undervalued. DiClemente said investors should rely less on Amazon’s revenue projections and more on its gross profits going forward. Evercore ISI, with an outperform rating, bumped up by 9 percent its 12-month price target on Amazon to $1,965 per share. The stock was higher at midday, trading around $1,700.

Since Amazon’s 52-week per-share low of $1,307 on Christmas Eve, the stock gained about 28 percent as of Friday’s close.

WATCH:McNamee says Amazon used Whole Foods as a learning experience

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