Posted on 10/23/2014 11:29:47 AM PDT by C19fan
Amazon.com Inc. reports quarter three earnings today and analysts are expecting a loss of $0.75 per share according to FactSet. That’s a significant jump from their loss of $0.09 per share for the same period last year. Amazon follows a “profitless prosperity” model so losses aren’t unexpected, and typically Wall Street shrugs them off. This year, however, Amazon (AMZN) has seen more than a 20% drop in value on the NASDAQ.
Wall Street is becoming restless-- is it time for Amazon.com CEO Jeff Bezos to start focusing on the bottom line?
Yahoo Finance’s Henry Blodget believes that investors are clearly becoming frustrated. “I think what really spooked people was the big loss that they forecasted this quarter. It was startling even to me,” says Blodget who has been a long time Amazon shareholder.
(Excerpt) Read more at finance.yahoo.com ...
Reinvestment. Anything Amazon makes in profit goes into making Amazon bigger. Buying companies, technology initiatives, horizontal growth. There’s always something to spend money on. And most of the time they pick winners, which gives them more profit to reinvest. And of course that model leaves plenty of money for C level salaries.
That's what I don't get. Do they pay a good dividend?
One of the least known not for profits in history was MasterCard. Until they went public, they were a not-for-profit.
Their headquarters in Purchase, NY is downright scary. It’s like something out of a 1970’s Star Trek episode.
>> Do they pay a good dividend?
They pay no dividend. And their trailing price to earnings ratio is 822/1.
But they hold the promise of tomorrow in their trembling hands, like a delicate butterfly. :-)
“It’s a buying opportunity!” ;-)
No, they’ve never turned a profit; Bezos plowed money into expansion instead. And buying the WaPo.
I saw Steve Ballmer on Charlie Rose a couple of nights ago. Ballmer made a point of comparing Microsoft’s profit record with Amazon’s. He really bitchslapped Bezos. (Ballmer just bought the Lakers…fascinating though obnoxious guy. You can watch the very lively interview here): http://www.charlierose.com/watch/60463433
The key is understanding investors for “profitless prosperity.”
Like investors for the dot.com boom, they expect to lose everything part of the time.
And some are only investing that which they can easily afford to lose.
If you are not in that category, you’ll likely not “get it.”
It is not very much different from oil wildcat funds, btw.
It’s absolutely sustainable if your lack of profit is being made correctly. If Amazon ever decided to stop growing they’d make a ton of profit. But they aren’t doing that, they reinvest, often times into very expensive ventures, which makes them “profitless” in the big picture.
They don’t really lose money year after year, they spend themselves back to zero year after year. That’s very sustainable.
Then you definitely should invest your money with them, if you’re not already.
I choose a different direction for myself though.
I shouldn’t. My investments are based on buy and hold, for that model Amazon is a terrible investment. Now if you’re intent is to sell the next time buzz increases their price it’s an awesome investment because it’s always a question of when not if on that front, they WILL make buzz and the price WILL go up.
There is a lot of truth to what you say. There are many online merchants, and the leaders all have their strengths and weaknesses. Some are best at PC parts, some at books some at crafts. Amazon seems to be good at most things, the best at a few.
I am sure they passed out plenty of their prosperity in political circles too.
By convincing investors that rather than looking at profit, they ought to instead look at earnings before interest and taxes (EBIT). You see, if you don't count the taxes they MUST pay or the interest the MUST pay, they're raking it in. Investors love it, stock prices soar, they cash out and make millions.
Eventually though some people will start saying "umm, what happens after you pay your taxes though?" And here we are.
I’ve been saying it for years, and I’ll continue saying it: Amazon is overrated, and not a good investment.
People have come to believe that, because something is high tech and there hasn’t been much competition in a particular space, that it must be a good investment. Amazon sounds like a good idea on paper, but, when the company disappoints quarter after quarter and year after year, and for so many years. there is no point in hoping that, perhaps next year or the year after that, or perhaps in five years, the company will start performing.
Amazon cannot compete with Microsoft or Google or any other company in web sales, because, those companies that have other products and services, have the cash reserves to compete and kill off the competition. Amazon is running on dry, and while they may remain big in sales and in cloud services, they will remain small in earnings, if they get any earnings at all.
People should put their money elsewhere after so many years of hope, but no delivery.
“Maybe that deal they made with California governor Jerry Brown to collect sales taxes on online sales wasn’t such a hot idea.”
Same deal they made with Susan “Puffy” Combs, the REPUBLICAN State Treasurer here in Texas. It has cost me a decent buck and also sent me looking for other, non-Amazon, options (which can often be had through Amazon).
Nope. There is no reason I can see for the stock to have the value it has. Of course, I expect it to fall, but it keeps going up anyway. Except it has been going down tonight.
If they’re not making a profit it isn’t because I’m not spending a lot of money with them.
Scammers can make higher profits with cheap illegal knockoffs and inferior products. In the short run the scammers win... in the long run people quit shopping at Amazon for anything of real value.
It appears scammers have found their home with Amazon.
If Amazon wants to clean up their act they'll make a special section where people can report goods they believe are knockoffs. And they'll start more 'policing' of their sellers.
Speaking of losing money in the publishing biz, how many copies of Cuomo’s book has Amazon sold? ;’)
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