To The Moon

Amazon Recent Summary:

• Amazon’s same-day Prime service just announced thousands of fresh grocery products, aiming to cover over 2,300 towns by the end of 2025;

• This could create a potential $30–200 billion GMV opportunity;

• In the latest Q2 earnings, Amazon beat expectations, mainly thanks to retail growth; AWS grew in line with forecasts;

• The key driver in retail was same-day/next-day product sales, up over 30% YoY;

• Retail traffic also boosted ad revenue growth, which accelerated to 22% YoY.

Evaluation:

• By aggressively expanding fresh grocery, Amazon is set to boost customer wallet share, purchase frequency, and Prime pricing power;

• For pros and cons, look to the food delivery market—US online penetration is only 15% so far;

• $Amazon.com(AMZN)$ Amazon’s main competitors are $DoorDash, Inc.(DASH)$ , $Uber(UBER)$ , and $Instacart, Inc. (Maplebear Inc.)(CART)$ ;

• Overall, this is a positive for Amazon’s core business;

• Based on 30x free cash flow, target price is $271.

Trading Strategy:

• If you hold AMZN shares, you can sell out-of-the-money calls to generate extra yield;

• If you want to chase the rally but are worried about buying the top, consider selling out-of-the-money puts.

Reference Strikes and Expiry:

• Covered call strategy: $AMZN 20250822 240.0 CALL$  (86% win rate)

• Put selling strategy: $AMZN 20250822 222.5 PUT$  (84% win rate)