Is Amazon the Best Prime Day Deal?

Summary

Motley Fool Money Podcast Summary Episode: "Is Amazon the Best Prime Day Deal?"
Release Date: July 8, 2025
Hosts: Anand Chocolate, Matt Frankel, and Jason Hall

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1. Introduction

In this episode of Motley Fool Money, hosts Anand Chocolate, Matt Frankel, and Jason Hall delve into several pressing topics affecting the investment landscape. The discussion kicks off with an update on recent tariff changes, transitions into an analysis of Amazon's Prime Day from an investment perspective, explores Elon Musk's latest ventures, and wraps up with bold predictions for the market.

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2. Tariffs Update

Matt Frankel opens the conversation by addressing the rapidly evolving situation surrounding tariffs:

"The President announced a whole new round of tariffs yesterday set to begin on August 1st for 14 countries... The President also said that the August 1 date is not set in stone. He said it's 'firm, but not 100% firm.'"
[00:40]

Frankel expresses concern over the unpredictability of these tariffs, highlighting their potential impact on major trading partners like Japan and South Korea, which are subject to significant tariff rates of up to 25%. He suggests that the announcement may be more of a negotiation tactic than definitive policy, comparing it to previous fluctuating tariff declarations.

Jason Hall adds his perspective on the broader economic implications:

"The uncertainty kind of weighs in there. But I mean, if you look at the markets, it seems like the markets are just shrugging this off as what's become business as usual."
[01:57]

Hall emphasizes the delicate balance trading partners face between delaying substantial tariffs and managing their industry and government expenditures. He notes that while the markets appear unfazed for now, the situation remains fluid and could escalate if unresolved issues reach higher judicial authorities like the Supreme Court.

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3. Amazon's Prime Day Analysis

Post-advertisement, the hosts pivot to discuss Amazon's Prime Day, which has expanded into a four-day event aimed at boosting sales during traditionally slow periods.

Jason Hall evaluates Amazon's performance and stock valuation:

"Its E-commerce revenue since 2019, so clean before the pandemic is up 77%. They've added $110 billion in e-commerce sales on a trailing 12-month basis."
[04:54]

Hall highlights Amazon's substantial growth in both its e-commerce and third-party sales sectors. However, he points out that while Amazon Web Services (AWS) remains the primary profit driver, it constitutes only 17% of revenue but generates more than half of the operating income. He questions whether Amazon's reinvestment of 85% of its operating cash flow into the business will translate into sustainable free cash flow, which is crucial for long-term profitability.

Matt Frankel complements this analysis by mentioning the burgeoning advertising segment:

"Advertising that they're building out... It's a higher margin type of revenue than it gets elsewhere."
[06:29]

Frankel asserts that although Amazon isn't as cheaply priced as it was a few months prior, it remains attractively valued due to improved efficiency, profitability, and continued growth in key areas like advertising.

The conversation then shifts to personal anecdotes about Prime Day shopping, illustrating how the event has become a significant retail phenomenon but with limited direct investing takeaways.

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4. Elon Musk and Tesla Discussion

The hosts transition to discussing Elon Musk's latest endeavors, particularly his attempt to establish a new political party.

Matt Frankel explores Musk's political ambitions:

"He describes the party as a tech-centric, budget-conscious, pro-energy, and centrist party with the goal of drawing both disaffected Democrats and Republicans."
[08:28]

Frankel outlines the challenges Musk faces in creating a viable third party, including logistical hurdles across all 50 states and the substantial financial resources required. While Musk has the means, the historical difficulty of gaining traction for third parties presents significant obstacles.

Jason Hall shifts focus back to Tesla, discussing its current state and future prospects:

"The company is at a major inflection point right now... There's a lot of reasons for investors to certainly be concerned about this."
[10:00]

Hall emphasizes that Tesla's ambitious projects, such as robotics and autonomous driving, require substantial investment and robust sales growth to generate the necessary cash flow. He also points out potential headwinds from new legislation affecting Tesla's profitability, particularly regarding emissions credits.

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5. Bold Predictions Segment

In the concluding segment, the hosts share their bold predictions for the market.

Jason Hall predicts challenges ahead for Tesla:

"In the next few years are going to be really, really tough for Tesla and probably tough for Tesla shareholders because there's so much of those future prospects that are baked into today's price."
[12:49]

Hall suggests that while Tesla's stock may rebound in the short term, the company's long-term prospects could strain investor confidence as ambitious projects take longer to materialize and monetize.

Matt Frankel offers a macroeconomic prediction:

"I'll make a very bold prediction and I'm going to say that the Fed is going to surprise the market and cut rates this month when they meet at the end of July."
[14:05]

Frankel anticipates that the Federal Reserve will lower interest rates sooner than the market expects, citing supportive remarks from Fed governors and potential stabilization from upcoming trade deals. This move, he notes, could positively impact stocks like Tesla.

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Conclusion

The episode of Motley Fool Money provides a comprehensive look into current economic policies, Amazon's evolving retail strategies, and the multifaceted challenges facing Tesla and Elon Musk. Through insightful analysis and bold predictions, Anand Chocolate, Matt Frankel, and Jason Hall offer valuable perspectives for investors navigating the complexities of the stock market.

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For more detailed discussions and investment insights, listen to the full episode of "Is Amazon the Best Prime Day Deal?" on Motley Fool Money.

Transcript

[Anand Chocolate]

Foreign what are you buying today? Bali fool. Money starts now. I'm on in Chocolu and I'm joined by two of my favorite fools, Matt Frankel and Jason Hall. Today we're talking Amazon's prime day, which is more like a prime week at this point. The latest on Tesla and Elon Musk, and we'll make some bold predictions. But first let's update ourselves on tariffs. What's going on there, Matt?

[Matt Frankel]

Well, the tariff news seems to be changing so quickly. We're only recording this a few hours before it's being published. And I'm kind of worried, if I'm being honest. So the president announced a whole new round of tariffs yesterday set to begin on August 1st for 14 countries. And that includes Japan and South Korea, which are our number four in six trading partners. Actually, those both got 25% tariff rates. Some of the announced rates were as high as 40%. The President also said that the August 1 date is not set in stone. He said it's quote firm, but not 100% firm. And I really think this is more noise than news at this point. I mean, remember the initial Liberation Day tariff rates with the thing that looked like the Cheesecake Factory menu and then the pause that was announced until July 9th. I mean, this might be an effective negotiation tactic to get better trade deals and to be fair, it looks like it might be. But until anything actually goes into effect and is actually finalized and signed by both parties, it's kind of noise. But in other tariff news, there is a good possibility that we're going to see a European Union trade deal soon. And each of those are the countries in the union are kind of small trading partners, but collectively they actually would make up our number one trading partner in terms of both imports and the trade deficit we have. So it's definitely worth watching from an investing perspective.

[Jason Hall]

Maybe the taco trades, real and still alive. I don't know. It's we've got another extension, another delay here. So there is a group that are going to say it's another chicken out moment, but I don't know if that's really investable for most of us. But thinking about the broad economic impact, I do think that for our trading partners, they're in a tough position. There's the tension between continuing to delay. Right. And avoid substantial tariffs because it seems like they keep getting kicked down the curb. But also all of their industry and government spending, they still have to plan too. Right. So all of the uncertainty kind of weighs in there. But I mean, if you look at the markets. It seems like the markets are just shrugging this off as what's become business as usual. Maybe it's this fall before we really find out. If litigation continues to play out and eventually this ends up at the Supreme Court, it might have been a whole lot of work for the Supreme Court to say, hey Congress, you guys need to do something. The President can't do this, so we'll see.

[Anand Chocolate]

We'll be back with Prime Day after this break.

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[Anand Chocolate]

Jason today is Amazon's prime day. We all know the deal. This is Amazon's once brilliant move to juice sales during the summer doldrums. Maybe pull forward some of that back to school shopping, taking a little market share. It's grown to four days long now. It's doubled from last year. But any takeaways for investors and you know what is Amazon stock priced as a prime deal at this point?

[Jason Hall]

So you're, I mean you're not including the early days, the pre prime days, deals that they do for people that can't hold off and wait for the four whole days. My wife may or may not have changed my Amazon password.

[Anand Chocolate]

Oh no.

[Jason Hall]

As an Amazon shopper, I'll tell you there are some things that I'm looking at for sure. But there's not much of an investing takeaway from that. It has become an event, it's become a retail event. But if we start looking at the business, the e commerce business has really bounced back. There was some much needed restructuring a couple of years ago of expenses after the massive expansion during the pandemic but that added scale, it's really, really paying off. Its E commerce revenue since 2019, so clean before the pandemic is up 77%. They've added $110 billion in e commerce sales on a 12 trailing 12 month basis. Here's another interesting data point. Third party sales services revenue that's also up by over $100 billion. So Amazon's role as a giant in fulfillment has also exploded along with its own sales. But Anand AWS is still the big profit driver. Generates more than half of operating income, but only off of 17% of revenue over the past four quarters. Now the stock is it a Prime Day deal? Maybe trades for less than 21 times operating cash flow. That's if you look back over the past decade, that's cheap. Here's the problem. They put about 85% of that operating cash flow right back into the business. But they need to right now, especially building up the tech infrastructure and R and D spending. But only time is going to tell if it can start converting those investments into free cash flow.

[Matt Frankel]

AWS is definitely the biggest profit driver for now. You also didn't mention the advertising that they're building out. That's one of the faster growing parts of their revenue, which is technically reported under the E Commerce platform, but it's a higher margin type of revenue than it gets elsewhere. Amazon certainly is not as cheap as it was just a few months ago, but it still looks very attractively valued considering the recent progress with both efficiency and profitability of the business. And all that growth you mentioned.

[Anand Chocolate]

Well, you know you got to raise the price right before you do the discount right for the it's just a little stock trick. Speaking of those deals, any any top prime deals for your households, Jason, I.

[Jason Hall]

Have to admit I'm eyeing a robot lawnmower, but I'm not convinced just yet. But since it's not Prime Day, it's Prime Week. Like you said, I got a little time to think about it.

[Matt Frankel]

In the past few years, we've bought the kids the new Fire tablets because they're so cheap on Prime Day. I haven't looked yet, but I'm sure my wife has and has a plan. I like it when she does the shopping because then when a bunch of packages show up and it's like Christmas.

[Anand Chocolate]

We'Ve been waiting on, we've got a kid who never brushes his teeth and has destroyed his previous electric toothbrush. But we still waited like a week to see if there are any deals. Spoiler alert, no deals on the specific toothbrush we wanted. We also looked at Walmart and Target who do kind of similar, kind of remora to the Amazon shark sales. But we'll see. I'm sure we'll be buying a bunch of stuff.

[Jason Hall]

Well, anand you know what you call a kid that won't brush their teeth?

[SoFi Advertisement]

What?

[Jason Hall]

A kid.

[Anand Chocolate]

Exactly. But this is where he's beyond the normal distribution.

[Matt Frankel]

I was gonna say you have one too.

[Anand Chocolate]

Right, right, right. At least versus his brother and all of his cousins. Let's move on to the boy who may have cried wolf on focusing less on politics and more on Tesla. What's up with Elon Musk today, Matt?

[Matt Frankel]

Oh, I assume you're talking about the new political party that he's starting, the America party. Because there's a lot that's up with Elon Musk. Right. Between Tesla, between SpaceX, between OpenAI or XAI, between all those other things, there's a lot that's up with Elon Musk. And he wanted to add one more thing to his plate by creating his own political party. And to be fair, he ran a poll on X, formerly Twitter, asking who would want a third party. And overwhelmingly from millions of votes and not just his own followers, through millions of votes. Everyone said 80% or so said yes. One of the party's stated goals is to get Republicans out of office who voted for Trump's bill. We all saw the big public fallout between him and the President. That's really what led to this. He describes the party as a tech centric, budget conscious, pro energy and centrist party with the goal of drawing both disaffected Democrats and Republicans. Now this is easier said than done. This is not the first attempt to create a third party. There are actually like four or five of them already in existence that just don't have any traction. It's very difficult to gain any traction as a third party. You would essentially have to set up a political party in all 50 states because all the local rules and things like that, it's all different. And you need a lot of money, which fortunately he has. How much he wants to spend on this is another. Another issue. But he has the resources to do it if he wants to.

[Jason Hall]

Yeah, I think the investing take, if we circle back around to Tesla and is honored, as you joked there at the beginning, the boy who cried wolf. Clearly Tesla shareholders as much as from a political perspective, I'm sure there's a lot of people, no matter your political affiliation, that are so frustrated with the environment that support the idea of this Tesla needs to figure out how to start selling more Teslas, and they need the resources from selling more Teslas to pay for so many things. The company is at a major inflection point right now. Dan Ives talked about this with where they stand with trying to start bringing robotics to commercial use in the next few years. We've seen what's going on in Austin with autonomous driving. That's such a massive future part of the business. You got to start selling more Teslas and generate the cash flow to fund these things. And there's even more headwinds now with some things in the spending bill that was passed that are going to gut a pretty important part of Tesla's profitability with the emissions credits. Right? So there's a lot of reasons for investors to certainly be concerned about this. Wherever you stand as an engaged citizen.

[Anand Chocolate]

Elon Musk is famous for his bold predictions. After this break, we'll have some of our own.

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[Anand Chocolate]

Time for a segment we call Bold Predictions. Jason, start us off. What's your bold prediction?

[Jason Hall]

All right, I'm going to stick with the theme from the show today, Anand, and talk about about Tesla. I think Tesla stock in the near term is probably going to rebound. But those robotics ambitions, the autonomous driving ambitions, I think they might be about as successful as the solar roof has been so far and that's to say not very, at least not within the next five years time and now a couple of reasons why. Number one, I think we've seen some very ambitious. You talked about Musk's predictions about things and they've accomplished a lot of great things, but always years and years later. I think that's going to continue to play out. But I think the concern that I have, and this is really at the heart of the prediction, is that while the stock might rebound in the near term, I think the next few years are going to be really, really tough for Tesla and probably tough for Tesla shareholders because there's so much of those future prospects that are baked into today's price. And I think as the realization comes out that those things are going to take longer and longer to monetize, and they might be harder to monetize. If Tesla can't start selling more Teslas instead of less Teslas, then shareholders may be really in for a tough time in the next five years or so.

[Matt Frankel]

Yeah, I'll make a very bold prediction and I'm going to say that the Fed is going to surprise the market and cut rates this month when they meet at the end of July. The market's only pricing in about a 10% chance of that happening right now. But based on what the Fed governors have said, other than Jerome Powell, it's more likely than that to happen. And I think there's a lot of economic data between now and then, a lot of trade deals that can be settled between now and then to calm the Fed's nerves. I think it's going to happen earlier.

[Jason Hall]

Than people think that would be positive for Tesla.

[Matt Frankel]

True.

[Anand Chocolate]

Here at the Motley fool, we live on feedback and Amazon gift cards. To be part of that feedback or to ask a question, email [e-mail] as always, people on the program may have interest in the stocks they talk about, and the Motley fool may have formal recommendations for or against don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show. Notes Jason Hall, Matt Frankel, the entire Motley fool money team. I'm on in Chocolate. My bold prediction is that we'll see you tomorrow.