Amazon goes up - so why are some people chewing their nails ?
While Facebook was dazzling everybody, the other West coast high flyer Amazon “stumbled a bit in the fourth quarter” as the New York Times put it.
Amazon: What's not to like?
Despite revenue reaching $25.59bn, up 20 per cent from 2012, and earnings per share reaching 51 cents, up from 21 cents the quarterly results disappointed Wall Street.
Shares in Amazon immediately fell more than 7 per cent.
So what was the problem? Expectations are all, said the NYT. Analysts had estimated the Seattle retailer to report revenue of $26.06bn and earnings of 66 cents a share.
The Times said there were sharply contrasting views on the company’s health.
The most pessimistic analyst thought Amazon would make only a penny in the fourth quarter. The most optimistic had forecast $1.88.
Amazon shares however were up sharply in regular trading later in the day. They rose $18 to $403, just short of the stock’s all-time high.
The NYT put it this way, “Investors love Amazon’s rapid growth and have been willing to forgo profits until some hazy point in the future. But the company’s valuation is increasing so fast — shares are up 10-fold in five years — that a few skeptics wonder if things are getting out of hand.”
Colin Gillis, an analyst with BGC Partners in a research note said Amazon was now valued at $176 billion, he said, which gives it the 17th largest valuation in the S&P 500 index.
“We see that the price investors are paying is expensive for the current level of revenue growth given the uncertainty around the degree of leverage that the company may be able to achieve,” Gillis wrote.