At time of writing Amazon.com, Inc. (NASDAQ:AMZN) shares were testing support at $300. The company’s earnings report, which arrived on Thursday afternoon, showed the same thing it usually does. Amazon is a thriving company with huge growth prospects, but it does not plan on returning a dividend, or anything like it, to investors any time soon.
Shares in the world’s biggest online retailer lost close to 10% of their value in trading on Thursday morning. The company’s stock had initially done well after the revelation of earnings on Thursday, but Friday’s analyst reports appear to have been too much for investors to bear. The company’s stock had a similarly terrible day after it revealed its Q4 2013 earnings numbers.
Analysts get harsh on Amazon
Several analysts downgraded their outlook for Amazon.com, Inc. (NASDAQ:AMZN) based on Thursday’s earnings report. The company showed that it is still intending aggressive investment in multiple areas, cutting profits as a result. International retail became a money-burner once again in Q1, a good sign of high investment in growth areas. Bank of America Merril Lynch and JPMorgan both still rate Amazon.com, Inc. (NASDAQ:AMZN) as a buy, but their price targets have dropped by $15 each. Bank of America Corp (NYSE:BAC) is now looking for the company to hit $420 in the next twelve months, JPMorgan Chase & Co. (NYSE:JPM) is looking for it to hit $350. Amazon.com, Inc. (NASDAQ:AMZN) has lost close to quarter of its value since the start of 2014, and today’s rout is likely to be remembered by the company’s shareholders. There is nothing more important than learning a lesson the second time around if it passed you by the first. Amazon is offering that gift to investors today.
Hope holds Amazon, earnings don’t
The last two big Amazon.com, Inc. (NASDAQ:AMZN) show that talk is what holds Amazon.com, Inc. (NASDAQ:AMZN) shares way up in the middle of the air. The company is valued at an incredible 500 times earnings, and it not only doesn’t show a consistent profit, the company appears to have no intention of turning a consistent profit. With the momentum crash of 2014 weighing on the minds of many investors, and memories of the dotcom crash still afflicting others, there is a simple analogy that should be understood. Amazon.com, Inc. (NASDAQ:AMZN) is the Amazon.com, Inc. (NASDAQ:AMZN) of today. That’s not to say it’s a bad business, or it won’t make money. The company’s definition of success over the medium term is different than that of its shareholders. That conflict hounds Amazon.com, Inc. (NASDAQ:AMZN) when it delivers earnings numbers, and it’s bound to continue as long as the company’s behaviour doesn’t change. Those investing in the company should leave hopes that it will change behind. The company i ruthlessly in pursuit of multiple goals, and none involve returning cash to investors.