Inc (AMZN) Set To Wish for a Magic Wand to Usher In Prosperity

It turned out to be a disappointing 23rd October, 2014, for investors interested in Inc (NASDAQ:AMZN) thanks to the global retail giant having posted a net loss of $437 billion for the third quarter Q3 that ended on 30th September. To make matters worse, the company has also projected a disappointing forecast for the upcoming holiday season wherein it expects its revenue growth to hover between 7-18% vis-à-vis 20% or more which has usually been the scenario in the past.

A senior analyst working for Key Private Bank, Rob Plaza, put the situation in a nutshell when he said –

“That kind of takes the topline growth story off the table. And now they’ve got to deliver on profit margins. Because of all that money they need to spend to drive growth, it becomes an expensive proposition.”

Investors attribute this decline to Inc (NASDAQ:AMZN)’s ambitious plans over the first half of 2014 that have driven it to acquire video-streaming, launch a smartphone which unfortunately flopped and offer to deliver groceries using the latest ‘Drone’ aircraft technology. Since all of this has occurred at the cost of its bottom line, it is but natural that investors have reached a point wherein they are running out of reserves of patience.


Tom Szkutak, Amazon’s CFO, justified the company’s standing by saying –

“We’ve certainly been in several years now what I’d call an ‘investment mode’ because of the opportunities that we’ve had in front of us.”

Likewise, disappointment was in the air when Inc (NASDAQ:AMZN) projected a less-than-usual revenue forecast for the holiday season which is just about to set in. While CFO Tom Szkutak felt that it was due to the dollar being stronger, Amazon CEO Jeff Bezos reiterated the company’s commitment to render holidays easier and free of stress for shoppers. That said, the competition is also gearing up, meaning it will be difficult for any one company to dominate the market.

As R.J. Hottovy of Morning Star put it –

“The market was looking for more in terms of revenue and operating income and the fourth-quarter outlook. It’s going to be a competitive landscape for retailers this holiday season and retailers will compete aggressively for consumers.”

As an aftermath, Inc (NASDAQ:AMZN)’s shares experienced a 9% slide to close at $284 on Thursday.

This article has been written by Vinita Basu.

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