Brett Schafer's avatar
$26.1m follower assets
Is Amazon Alexa a bust?
The division has over 10k employees and reportedly over $5 billion in fixed costs. Where is the return on investing capital (ROIC) for $AMZN here?

I get they have a lot of households with Alexa-activated devices (by selling gadgets at or below cost, I may add) but I fail to see where they are actually generating cash flow vs. how much they are spending on what seems like a science project.

Here's another question that frames my thinking: If Alexa was shut down overnight, what would Amazon lose? Would people spend significantly less through its retail channels vs. the $5 billion or more in cost savings it would achieve?

Where am I wrong here?

We discussed this and more on our recent Investing Power Hour episode https://www.youtube.com/watch?v=cpb3K9r7EKQ
Conor Mac's avatar
10K employees for alexa? What the
Brett Schafer's avatar
@investmenttalk I know, right? And a lot of that data is back from 2019, so I think it is probably higher now
Conor Mac's avatar
@ccm_brett Could not imagine what they'd even do! Is there any indication as to how much income/revenue that division brings in?
Brett Schafer's avatar
@investmenttalk Haven't seen anything but I think it would be hard to quantify as it is supposed to be more of a "holistic" strategy to lock-in e-commerce customers
Michael Szumielewski's avatar
Great question, $5B seems like quite a lot, will have to look into that.
Brett Schafer's avatar
@caridinacapital Idk if it would be a thesis buster for the stock but it is definitely illuminating for why the company is not generating positive free cash flow on a consolidated basis

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