Tren Griffin @trengriffin I work for Microsoft. Previously I was a partner at Eagle River, a private equity firm established by Craig McCaw. I am on the board of directors of Kymeta. Dec. 26, 2019 1 min read

25iQuiz: What is the LTV of a Prime subscriber?

"Amazon said the number of items delivered under its Prime free-shipping program almost quadrupled from a year ago."

"One of the hottest buys was: Glitter Globe Doll Winter Disco Series with Glitter Hair."  https://www.barrons.com/articles/amazon-stock-rallies-on-strong-holiday-sales-51577392774?refsec=technology 

Do you agree?

This LTV calculation for Amazon Prime from a few years ago is based on one set of assumptions by one analyst based on incomplete information.

ARPU: $193 a month

SAC: $312

Gross margin 29%

Churn 0.6% (customer life 167 months or ~14 years)

Discount rate 9%

Amazon isn't understandable if you believe its business model is similar to the manufacturer you learned about in "introduction to accounting." Also: trying to value Amazon’s Prime business with a P/E ratio is like trying to open a can of corn with a pickle. Focus on cash flow.


You can follow @trengriffin.



Bookmark

____
Tip: mention @threader_app on a Twitter thread with the keyword “compile” to get a link to it.

Enjoy Threader? Sign up.

Threader is an independent project created by only two developers. The site gets 500,000+ visits a month and our iOS Twitter client was featured as an App of the Day by Apple. Running this space is expensive and time consuming. If you find Threader useful, please consider supporting us to make it a sustainable project.