Jeff Bezos

Shares of Amazon.com are taking a beating today after the online retailer posted weak earnings on Tuesday that disappointed Wall Street. The stock is off more than 10 percent, trading just above $200 per share. The sell off has pushed Amazon’s market value below $100 billion, and the earnings miss has raised concerns among some analysts who follow the company.

Dan Geiman, an analyst with McAdams Wright Ragen in Seattle, reiterated a hold on the stock and raised concerns about pressure on the company’s profit margins. He wrote in a research note:

“With the stock priced at a premium multiple, AMZN couldn’t afford to merely meet expectations on the top line. And the fact that sales were in line to slightly below expectations will increasingly shift investors’ focus to earnings and margins, which have been under pressure for several quarters now and which continue to deteriorate on investments in fulfillment, marketing, and the costs related with the fourth quarter launch of the Kindle Fire tablet, and other digital. We feel that, as sales and earnings have continued along divergent paths, investors have allowed AMZN a grace period, recognizing that at least a portion of the investments were a necessary function of the company’s growth. But if the increase in sales fails to translate into an incremental boost in earnings fairly quickly – and the company’s fourth quarter guidance suggests that pressures will continue in the immediate term – investors will start to lose patience, we believe.”

Amazon yesterday reported profits that were down 73 percent to $63 million. Today, the stock is down more than $26, trading at $200.21.

Amazon.com founder Jeff Bezos has said in the past that the company is willing to be misunderstood for very long periods of time. But how long will Wall Street stomach it?

Here’s a look at activity this morning for Amazon.com’s stock.

Comments

  • Anonymous

    Foolish to sell. Amazon is investing to expand and grow sales and profits.  Bezos knows how to go big and look at the future.  The good news is I am buying on the dip

    • Guest

      AMZN: 119 times earnings
      AAPL: 14
      GOOG: 20

      AMZN is averaging 44 new employees/business day right now. And those aren’t fulfillment center workers, most are expensive exempt employees.

      I appreciate Bezos’s long-term approach, but investors are willing to only give a CEO so much runway. It will be a long time before these extremely high expenses will turn into profit (or free cash flow, as Amazon likes to look at). There is risk that it never will. I can understand why the sell off has occurred. Some investors are coming to the realization that they may have given Bezos too much rope.

    • Guest

      AMZN: 119 times earnings
      AAPL: 14
      GOOG: 20

      AMZN is averaging 44 new employees/business day right now. And those aren’t fulfillment center workers, most are expensive exempt employees.

      I appreciate Bezos’s long-term approach, but investors are willing to only give a CEO so much runway. It will be a long time before these extremely high expenses will turn into profit (or free cash flow, as Amazon likes to look at). There is risk that it never will. I can understand why the sell off has occurred. Some investors are coming to the realization that they may have given Bezos too much rope.

  • Anonymous

    Foolish to sell. Amazon is investing to expand and grow sales and profits.  Bezos knows how to go big and look at the future.  The good news is I am buying on the dip

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