, Inc. (AMZN) Tanks 9 Percent Over Potential Losses

1, Inc. (AMZN) Tanks 9 Percent Over Potential Losses
By Szk7788 (Own work) [CC BY-SA 3.0 or GFDL], via Wikimedia Commons

The shares of e-commerce giant,, Inc. (NASDAQ:AMZN) are declining as investors were concerned with the guidance issued by the company for the current quarter. The stock dropped more than 9% to as low as $363.85 per share today.

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Amazon’s earnings guidance, Inc. (NASDAQ:AMZN) estimated that its operating results will be in the range of $200 million losses to $200 million profit for the current quarter. In the same period a year ago, the e-commerce giant reported $181 million.  On the brighter side, the company projected that its net sales for the current quarter will increase in the range of $18.2 billion to $19.9 billion, an increase of 13% compared to 24% last year.

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Despite the estimated growth in sales, some investors are concerned with the spending habits of, Inc. (NASDAQ:AMZN) that could outweigh its potential revenue particularly from its planned price increase for membership fees in Amazon Prime.

Analysts’ comments, Inc. (NASDAQ:AMZN) said it might be able to increase the current $79 membership fee for Amazon Prime by $20 to $40 in the United States due to higher fuel and transportation costs. The increase could result to additional $500 million to $1 billion revenue as estimated by Wall Street analysts.

JP Morgan analyst, Doug Anmuth commented, “…the increase in Prime pricing appears to be a positive for margin in the near term. We believe Amazon is likely to re-invest some of the additional shipping revenue to increase capacity.”

On the other hand, Daniel Kurnos, analyst at Benchmark opined, “In addition to increased internal investment to build out the digital library, distribution center capacity and enhance offering … Amazon may be facing further margin pressure due to the success of its Amazon Prime offering.”

Meanwhile, Brain Novak, analyst at Susquehanna, observed that the business of the e-commerce giant is not dependent on the holiday shopping season compared with its peers in the retail industry. According to him, “As much as we continue to hope for a 4Q unit acceleration,, Inc. (NASDAQ:AMZN) continues to prove that its business is less holiday-driven than many other retailers due to the high volume of ‘staple’ and recurring unit sales.”

Several analysts believed that, Inc. (NASDAQ:AMZN) will continue to grow faster because of its innovation and investments in the retail and cloud space.

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Marie received her Bachelors Degree in Mass Communication from New Era University. She is a former news writer and program producer for Nation Broadcasting Corporation (NBC-DZAR 1026), a nationwide AM radio station. She was also involved in events management. Marie was also a former Young Ambassador of Goodwill during the 26th Ship for Southeast Asian Youth Program (SSEAYP). She loves to read, travel and take photographs. She considers gardening a therapy.
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  1. It seems Amazon is spending money on half of the commercial real estate in the Seattle area.
    I don’t know why they need so many more employees.
    But i will continue of invest in AMZN, as it continues to grow.

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