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Debunking The Latest Myth - Fulfillment Leverage (AMZN) analysts are fond of taking any seemingly positive metric they can find, and pumping it up to make a bullish thesis out of it. This has happened with free cash flow, gross margins (still does!), revenue growth, Amazon Prime, Amazon Fresh and everything in between.

The latest thing they've found to pump up is how fulfillment costs "greatly decelerated" from Q3 2014 to Q4 2014. This, everyone seems to think, is the first sign of the long-expected "leverage" that was going to make the rivers of profit honey flow. This thesis is mostly supported by the way fulfillment costs grew at a 30% YoY rate in Q3 2014, and at just 17.3% YoY on Q4 2014.

This, too, is misleading

Why is it misleading? First, let me add most of the data we will need to analyze this situation (Source: Multiple earnings reports)… Read More …