Amazon Investment Opportunity

Corporate Finance Institute®

 Agenda

Appendices
1. Introduction 1. Supplementary Financial Forecast Materials
2. Market Update 2. Supplementary Value Analysis Materials
3. Amazon Overview
4. Implied Value Analysis
5. Conclusion

This presentation is intended solely for educational and training purposes. The information contained herein does not constitute investment advice, or an offer to sell, or the solicitation of any offer to buy any securities of Amazon.com,
Inc. (NasdaqGS:AMZN) or any other security.

This content in this presentation has not been approved or disapproved by (a) Amazon.com, Inc., (b) S&P Global Market Intelligence Inc., (c) any equity research analyst that covers Amazon.com, Inc., or (d) any securities regulator in any
province or territory of Canada, the United States Securities and Exchange Commission or any other United States federal or state regulatory authority, and no such commission or authority has passed upon the merits, accuracy or
adequacy of this content, nor is it intended that any will.

The information in this presentation does not constitute the provision of investment, tax, legal, or other professional advice. As with all investments, there are associated risks, and you could lose money investing – including, potentially,
your entire investment. Prior to making any investment, a prospective investor should consult with its own investment, accounting, legal, and tax advisers to evaluate independently the risks, consequences, and suitability of that
investment.

No reliance may be placed for any purpose on the information and opinions contained herein or their accuracy or completeness, and nothing contained herein may be relied upon in making any investment decision.

Corporate Finance Institute®

 1. Introduction

• We believe that an equity investment in Amazon.com, Inc. (“Amazon” or the “Company”) represents an attractive
opportunity despite recent increases in its share price
• Amazon’s share price has risen 457% over the past 5 years
• A favorable macroeconomic environment and a positive outlook for Ecommerce and related industries are
strong tailwinds for Amazon to maintain its impressive trajectory
• Amazon represents a diversified investment opportunity in a market leader across the Ecommerce, Subscription
Services, Cloud Computing, and Advertising industries

• We have undertaken a review of Amazon’s historical financial results and business operations and prepared a
detailed financial forecast for the Company
• Our financial forecast is based on publicly available information and our assumptions regarding sales growth,
operating costs, and capital expenditures

• We also conducted a detailed value assessment using our financial forecast and standard valuation techniques

• We believe that Amazon shares are attractively valued relative to its peers and offers significant upside potential

At current market prices, we recommend an equity investment in Amazon shares

Corporate Finance Institute®

 2. Market Update

• Favorable economic conditions and industry trends in Macroeconomic Forecast2

the US indicate a high likelihood for Amazon to
continue its strong performance

• US Ecommerce industry is expected to grow by a

CAGR of 6.44% from 2021-2030
• More time-strapped and cost-conscious
consumers are enticed by the convenience of
finding and purchasing products online
US Market Size (US$ Billions)1
• US Cloud computing and Advertising are forecast for
strong growth over the next decade
• CAGRs of 3.39% and 5.13%, respectively
• Forecasted growth driven by an increase in the
percentage of online commerce leading to
increased data use and online ad spend

1 IBISWorld Industry Research

2PwC, Congressional Budget Office, TD
Corporate Finance Institute®
 3. Amazon Overview

• Amazon is a global retailer of consumer products and subscriptions. Current Capitalization

Amazon's business activities include:
• Selling merchandise and content purchased for resale from third-
party sellers through physical and online stores
• Manufacturing and selling electronic devices and developing and
producing media content
• Offering programs that enable sellers to sell their products and
content on its websites and its stores
• Providing compute, storage, database, and other AWS services, as Historical Share Price Performance
well as fulfillment, advertising, publishing, and digital content
subscriptions
• Offering Amazon Prime, a membership program, which provides free
shipping of various items, access to streaming of movies and TV
episodes, and other services

Corporate Finance Institute®

 3. Amazon Overview

• Amazon's business activities include: Amazon Revenue Composition (2020A)

First Party Retail (1P)

Sale of goods directly to customers

Third Party Retail (3P)

Third parties utilize Amazon’s platform to sell
its goods. Amazon collects a % of each sale

Retail Subscription Services

Amazon’s subscription services

Amazon Web Services

Cloud computing services

Other
Amazon’s advertising business segment

Corporate Finance Institute®

 3. Amazon Overview

Key competitors for each of Amazon’s business segments and average trading multiples are as follows:

First Party Third Party Retail Amazon Web

Other
Retail Retail Subscriptions Services

Average Current Trading Multiples (FY+1 Revenue)

1.6x 7.9x 9.0x 6.5x 8.8x

Corporate Finance Institute®

 3. Amazon Overview

• We prepared a 10-year financial forecast based on publicly available historical information as well as our own
independent economic assumptions
• We have forecast revenues on a business segment-by-business segment basis using historical growth rates,
building down to earnings and cash flow on a consolidated level

• Three growth scenarios were examined (Bear, Base, and Bull cases)
• Each scenario assumes different annual revenue growth rates

Summary of Key Forecast Assumptions

Base Case Bear Case Bull Case
Segment Revenue Growth Rate • Based on historical 5-year • 25% lower than the Base • 25% higher than the Base
average Case growth rate Case growth rate
• Growth rate declines
each year
Operating Costs • Based on historical percentages (% of revenue)

Capital Expenditures • Based on historical percentages (% of revenue)

Corporate Finance Institute®

 3. Amazon Overview

Multi-Scenario Revenue Forecast (US$ Millions) Segmented Revenue - Base Case

EBITDA & FCFF - Base Case (US$ Millions) Net Earnings (US$ Millions)

Corporate Finance Institute®

 4. Implied Value Analysis

• We have undertaken a thorough valuation of Amazon using the following valuation methodologies to determine an
appropriate value range

Primary Valuation Methodologies

Discounted Cash Flow (DCF) Sum-of-the-Parts (SOTP) Analysis Precedent Transactions Analysis

• Reflects the value of the Company’s assets • Reflects public market trading value and, • Provides value metrics inclusive of implied
and business forecast accordingly, may not reflect “en bloc” value change of control premium

• Based on forecasted free cash flow from

• Selected comparable companies for each • Precedent transaction multiples ranged
2021 to 2031 for the three scenarios (base,
of Amazon’s business segments from 5.8x to 20.2x
bull, bear)

• Estimated WACC for Amazon of 8.0% • Limitations in the context of Amazon due
• Revenue multiples were used as Amazon
• Terminal value based on an assumed to a lack of directly comparable
does not disclose segmented earnings
EV/EBITDA exit multiple of 25.0x transactions

Corporate Finance Institute®

 4. Implied Value Analysis

• Secondary value measures were also examined to help validate primary measures

Equity
Equity Research
Research Target
Target Prices
Prices ($/sh.)
($/sh.) AMZN
AMZNHistorical
HistoricalShare
SharePrice
PricePerformance
Performance
$5,200 $4,000
$4,650
$4,500 $3,500
$4,400
$4,350 $3,000
$4,250
$4,155 $2,500
$4,150
$4,100 $2,000
$4,000
$3,975 $1,500
$3,940
$3,900 $1,000
$3,860
$3,750 $500
$3,700
$0
$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Oct-15 Sep-16 Jul-17 May-18 Mar-19 Jan-20 Dec-20

Corporate Finance Institute®

 4. Implied Value Analysis

A greater weighting was placed on primary value measures in determining an appropriate value range, particularly
intrinsic methodologies.

Implied
Implied Enterprise Value Summary
Enterprise Value Summary (US$ Billions)
(US$ Billions)

Discounted Cash Flow $1,864 $3,352

SOTP $1,332 $3,931

Precedents $331 $1,157

Research Targets $1,976 $2,754

Historical Share Price $1,016 $1,889

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000

Selected Share Price Range: $2,800 $3,200

Corporate Finance Institute®

 5. Conclusion

• Based on our analysis, we recommend an investment in the equity of Amazon

• The range of values implied for Amazon resents significant downside protection and potential for investment upside

Amazon Implied Equity Value (US$ Billions) Investment Recommendation: BUY

Low Mid High Low High

Selected Implied Value Range $2,800 $3,000 $3,200 Equity Value per Share (US$/sh.) $5,289 $6,061

Less: Net Debt ($59) ($59) ($59) Current Share Price (US$/sh.) $3,075 $3,075

Equity Value $2,741 $2,941 $3,141 Potential Upside 72% 97%

Equity Value per Share (US$/sh.) $5,289 $5,675 $6,061

Corporate Finance Institute®

 A. Supplementary Financial Forecast Materials

Key Forecast Assumptions

Balance Sheet Forecast Assumptions Revenue Forecast Assumptions
Current Assets & Liabilities Base Case Annual Growth Taper 20%
A/R A/P Inv.
Bull Case Growth (+ Base %) 25%
Days Outstanding 25 85 45
Bear Case Growth (- Base %) -25%
Accrued Expenses (% of Revenue) 10.7%
Unearned Revenue (% of Revenue) 2.9% Expense Forecast Assumptions (% of Revenue)
Annual Growth of Marketable Securities 4.0% Cost of Sales 61.%

Property & Equipment

Cash Capex (% of Revenue) 5.8%
Fulfillment 14.3%
Asset Average Useful Life 10 Years
Marketing 10.9%
Property & Equipment
Technology and Content 7.2%
Operating Finance
Net Annual Additions (% of Revenue) 3.5% 4.4% General and Administrative 1.9%
Interest Rate on Leases 2.5% 2.1%
Other Operating Expenses (Net) 0.1%
Weighted-Average Remaining Term (Existing Leases) 11.3 Years 6.2 Years
Lease Term (New Leases) 15.0 Years 10.0 Years Stock-Based Compensation (% of G&A) 6.8%

Corporate Finance Institute®

 A. Supplementary Financial Forecast Materials

Key Summary Outputs (US$ Millions)

Corporate Finance Institute®

 B. Supplementary Value Analysis Materials

Discounted Cash Flow Analysis – Base Case (US$ Millions)

DCF Value Summary (US$ Millions) NPV Build-Up (US$ Billions)

Corporate Finance Institute®

 B. Supplementary Value Analysis Materials

Average Weighted-Average Cost of Capital (WACC)

Comparable Companies Beta Amazon WACC Calculation

Corporate Finance Institute®

 B. Supplementary Value Analysis Materials

Discounted Cash Flow Analysis – Base Case

Sensitivities – Intrinsic Value ($/share) Valuation Assumptions
5-Year Average Tax Rate 32.2%

Interest Rate 3.0%

DCF Assumptions

Terminal Value Methodology Average

Terminal Value EBITDA Multiple 25.0x

Long-Term Growth Rate 4.0%

WACC 8.0%

Corporate Finance Institute®

 B. Supplementary Value Analysis Materials

Sum of the Parts Analysis

SOTP Build-Up (US$ Billions) SOTP Valuation Summary (US$ Millions)

Corporate Finance Institute®

 B. Supplementary Value Analysis Materials

Sum of the Parts Analysis

Comparable Company Data (US$ Millions)

1 Fully
diluted (treasury stock method)
2 Market capitalization plus long-term debt net of working capital as at the most recently disclosed quarter, adjusted for subsequent acquisitions and financings
Corporate Finance Institute® 3 Based on Consensus research estimates
 B. Supplementary Value Analysis Materials

Precedent Transaction Analysis

Precedent Transaction Multiples (EV/EBITDA) Precedents Valuation Summary (US$ Millions)

25.0x
20.2x
20.0x 18.5x
16.7x
15.2x 14.4x
15.0x 12.8x

10.0x 9.1x
7.3x
5.8x 6.1x
5.0x

0.0x
Average: 12.6x
Implied EV: US$723 Billion

Corporate Finance Institute®

 B. Supplementary Value Analysis Materials

Precedent Transaction Analysis

Precedent M&A Transaction Data (US$ Millions)

Corporate Finance Institute®