In this segment of the Motley Fool Money podcast, host Chris Hill is joined by Million Dollar Portfolio's Jason Moser, Hidden Gems Canada's David Kretzmann, and Total Income's Ron Gross to reflect on last week's business and economic news, and one of the big stories was the annual letter to shareholders from Amazon.com (NASDAQ:AMZN) boss Jeff Bezos, which included, finally, word on how large its Amazon Prime service has become.
Given that Prime is the keystone in the arch of the company's e-commerce strategy, it's information investors should take seriously. But there were many other points in that letter that Fools should be paying attention to.
A full transcript follows the video.
This video was recorded on April 20, 2018.
Chris Hill: We begin with the two big numbers of the week: 100 million and 1 billion. In his annual letter to shareholders this week, Amazon CEO Jeff Bezos revealed the company has 100 million members in its Prime service. And on Friday, Wells Fargo agreed to a $1 billion fine as punishment for home and auto loan abuses.
Let's start with Amazon, Jason. This is the first time they've ever disclosed the number of people who were in the Prime service. Did this surprise you even a little bit?
Jason Moser: Well, I always figured at some point, we would get an actual number from Jeff Bezos. I think he was just looking for a meaningful number. And, 100 million seems kind of meaningful, so, nice timing there. I think we've said it for a while, and Amazon is obviously a recommendation in many of our services, but the Prime membership is just the pot of gold at the end of the rainbow for this company. That is what dictates this company's strategy. So, now we have a good idea of how big that pot of gold is.
In regard to the shareholder letter, I cannot recommend enough that everybody listening read it, because every year it's always a good one. This one, he's talking more about high standards. And I actually called on every high school in the country, you have a free day here for teachers just to teach these high school students, one day, take that letter. It would be a good class. I think it would stoke a lot of good discussions for kids that need to be thinking about high standards in these days.
Another thing that stood out to me, and our colleague Matty Argersinger and I were talking about this yesterday, is the bullet point India. Any time you actually have a country as a bullet point in the letter, you know it's probably kind of important. And with India, we think about how many Prime subscribers there are. We have a lot more to come, because India is just getting started. And that's a country with 1.3 billion people, and a GDP per capita of only around $1,800 today. So, big opportunity.
David Kretzmann: Yeah, and the e-commerce opportunity in India is really just heating up. You have Walmart trying to supposedly acquire Flipkart, which is either the leading or the second leading e-commerce company in India, so that'll be a fascinating competitive battle in the coming years. Something else that stuck out to me besides Jeff Bezos talking about what he learned from handstands in the letter -- a little teaser there to go read it if you haven't already -- just, the inroads that Amazon is making into the connected home. They have the Echo devices, they have the Fire TV, they recently acquired Ring, which is a security doorbell camera. So, when you're looking at companies making inroads into the connected home, I think Amazon is at the top of the list.
Ron Gross: It will be interesting to see, now that the cat is out of the bag, do they continue to update us on the Prime number, and if so, how often? Because obviously, analysts will now be foaming at the mouth trying to get at that data on a quarterly or even annual basis. But, we'll see. I could see Bezos saying, "Sorry, psych, that was a one-time thing."
Moser: That's a conference call that they just do not give a lot of information on. So, I bet we'll hear them ask that that question a lot, probably won't get as many answers. But, maybe more now than we did before.
Kretzmann: When they hit 200 million, that's when we'll hear it again.
Hill: Am I the only one who thought that number was higher? I mean, if you had asked me to guess, I wouldn't have guessed 100 million. I might have been close --
Moser: I will say, our estimates in Million Dollar Portfolio were at around 100 million, and that was published, so it actually took us by surprise that we were so close. [laughs]
Gross: Nice job.
Moser: Thank you.