Amazon stock tumbled 11 percent after today’s earnings report. Here’s why:
Amazon recorded $35.75 billion in sales in last year’s final three months [and] $482 million in profit….Analysts, however, were expecting $36 billion in sales and net income of $754 million.
I assume no one was concerned about Amazon missing its sales forecast by a minuscule amount, so this was all about its profit number. But in the past, investors didn’t much care about Amazon’s profitability. They just trusted Jeff Bezos to grow the company and shovel earnings endlessly into ever more growth opportunities. Eventually Amazon would own the whole world.
Not anymore. Amazon’s sales growth is now merely mortal, not stratospheric, and investors want to see Amazon prove it can actually make money as a mature corporation. I guess pretax income of 1.3 percent just isn’t going to cut it in the future.
