Amazon shares slip downstream

NASDAQ

The internet giant Amazon saw shares slump by 11.36% today, after posting a loss for the second quarter, it has been reported.

Despite revenue increases, the company’s aggressive investment efforts have come at the expense of profits, meaning that Amazon has seen stocks fall by 21% this year, well short of market expectations. Last night, the company announced a loss of $126m – a decrease of $0.27 per share, compared to the $0.15 drop estimated by Wall Street.

However, some commentators have suggested that the investment programme, which has included development of the Fire smartphone and cloud computers, will result in long-term gains for Amazon. “The investments behind the projected third-quarter operating loss (international expansion, AWS, Fresh, new devices, fulfilment speed, and content) should spur consumer demand and open up eventual expense leverage opportunities,” wrote  R.J. Hottovy, equity strategist at Morningstar.  “Amazon’s international investments are intriguing, as many overseas markets are at earlier stages in their e-commerce adoption curves, but offer long-term growth and margin potential as demand catches up with fulfilment capacity (including expedited cross-border shipping in Europe).”

 

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