Amazon Stock Crushed After Earnings Report

AMZN StockAmazon Stock Takes a Beating, Inc. (NASDAQ:AMZN) fell in after-hours trading as the company missed on its earnings report, dropping Amazon stock by 4.5%.

The company registered a higher-than-expected earnings per share at $1.54 against the Thomson Reuters consensus estimate of $1.35, but fell short in revenue. Amazon stock reported $43.74 billion in revenue, below the Reuters projected $44.68 billion. (Source: “Amazon sinks as revenue misses, guidance disappoints,” CNBC, February 2, 2017.)

While “Amazon Web Services” increased by 47% in the quarter, that wasn’t enough to generate the expected revenue. The company reported $3.536 billion opposed to the $3.6 billion expected by FactSet Research Systems Inc. (Source: “Amazon Sales, Outlook Weak; Visa, Amgen Beat; Chipotle Profit Misses,” Investor’s Business Daily, February 2, 2017.)

AMZN stock also put out a Q1 revenue estimate of $33.25 billion to $35.75 billion, below the consensus estimate of $35.95 billion.

The tech giant had a rough go of it in the quarter, putting more emphasis on future products where the company is attempting to innovate. Features like drone delivery and fulfillment centers were a focus during 2016, along with expansion into markets like China and India.

The company was also keen on adding to its “Amazon Prime” services, as well as acquiring prestigious content for its streaming offerings, hoping to rise above a quickly crowding industry.

CEO Jeff Bezos put emphasis on Amazon Prime, saying in a statement that “tens of millions of new paid members joined the program in just this past year.”

“Prime members can now choose from over 50 million items with free two-day shipping — up 73 percent since 2015,” Bezos continued. “Prime Video is now available in more than 200 countries and territories. Prime Now added 18 new cities, which means millions more members now get one and two hour delivery.” (Source: CNBC, op cit.)

AMZN stock had an up-and-down week leading to the earnings report, with today’s fall likely to see the company begin February on a downward trend.

The company registered around four percent in gains this week before the earnings report release.

Investors have been high on Amazon stock for some time now, as its e-commerce empire continues to grow alongside its Amazon Web Services. The company was up almost 10% over the past three months.

Other products like the “Echo” personal assistant and the AI component, “Alexa,” helped drive top-selling products on Amazon during the holidays, the company said. The products also helped to create a bit of a cultural moment, with the introduction of the electronic assistant making headlines for its novelty and innovation.

The downside to the Echo, however, is the alleged enabling of widespread sale of counterfeits on the program which has begun mounting into legal pressure. But the threat of litigation has not yet impacted Amazon financials.

2016 was a good year for vendors on Amazon. The company said it had over 100,000 sellers with sales of more than $100,000.

Amazon stock has a lot of fingers in a lot of pies. From drone delivery to human-free grocery stores, the company is certainly not sitting on its laurels. While the earnings report was relatively weak and will set the company back, expect more innovative products to be rolled out in 2017, though whether they will sell is another matter entirely.