Analysis Amazon: Development Share Price and CFO per Share since 2012

Between 2012 and 2023, Amazon's stock price increased at a CAGR of 25.2%. As we know, in the long term, a company's stock price follows the intrinsic value development per share of the underlying company.

Earlier, I shared a chart showing the P/CFO trend for Amazon over the past few years, where P stands for Amazon's stock price and CFO represents cash flow from operating activities. In that chart, you could see that this ratio fluctuated between 15 and 47 over the past 14 years, with strong deviations from the average being caused by a faster rising or falling stock price relative to operating cash flows, and vice versa.

In the above chart, the development of Amazon's stock price (year-end) (in black, right Y-axis) is plotted against the CFO per share (diluted) (in blue, left Y-axis)*. As you can see, these two metrics move in tandem, with short-term deviations aside. 

It is therefore important to zoom out on Planet Finance. Over a longer period, a company's stock price follows the intrinsic value development per share. This is also evident with Amazon: while the stock price increased by 25.2% CAGR since 2012, the TTM CFO per share rose by 29.8% CAGR during this period. This extra increase in the intrinsic value per share is something you want to see in growth companies—multiples for such companies tend to stabilize as they mature.

Amazon saw its operating cash flows rise from $4.2 billion in 2012 to $84.9 billion in 2023. This substantial increase has been well rewarded by investors: Amazon's stock, adjusted for stock splits, rose from nearly $13 in 2012 to $151 in 2023.

*) For readability, both metrics are presented in rounded figures. 

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