Hol­i­day slump could cut 10% off Ama­zon shares

Financial Mirror (Cyprus) - - FRONT PAGE -

Is Ama­zon.com Inc. (NAS­DAQ: AMZN) likely to reach another 52-week low soon? If it posts poor hol­i­day sales, there is ev­ery chance its shares could sell off another 10%, which would put them the be­low the cur­rent 52-week fig­ure of $284.

Ama­zon has al­ready sig­nalled the cur­rent quar­ter will be poor, both in po­ten­tial rev­enue gain and a strong chance of post­ing another loss.

When the e-com­merce company re­leased its most re­cent num­bers, man­age­ment looked ahead at the cur­rent pe­riod with net sales ex­pected be­tween $27.3 bln and $30.3 bln, or to grow 7-18% com­pared with fourth quar­ter 2013; while, op­er­at­ing in­come (loss) was ex­pected to be be­tween $(570) mln and $430 mln, com­pared to $510 mln in the fourth quar­ter 2013.

This raises two prob­lems. The first is that a 7% im­prove­ment in rev­enue in the hol­i­day sea­son would be a dis­as­ter. The sec­ond is that Wall Street is tired of losses.

It has been as­sumed for some time that as Ama­zon con­sol­i­dates it po­si­tion in e-com­merce, and brick-and­mor­tar re­tail sales con­tinue to weaken in favour of those on­line, the company’s top line should grow in the dou­ble dig­its. Ama­zon would need to suf­fer an ero­sion of many ad­van­tages for rev­enue to grow only 7% this quar­ter.

As far as its bot­tom line is con­cerned, in­vestors are weary of the re­peated ex­per­i­ments by founder Jeff Be­zos. Th­ese run from new con­sumer elec­tron­ics prod­ucts like its Fire smart­phone to Ama­zon TV.

At $313, Ama­zon’s stock is much closer to its 52-week low of $284 than its high for the pe­riod of $408. It will only take one large stum­ble dur­ing the hol­i­days for the share price to run to­ward $280 or be­low.

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