AMZN: 13 Stats Behind Last Week’s Amazon Earnings Disaster

As you likely saw or heard, Amazon (AMZN) stock got absolutely pounded last Friday. Investors spotted a spotty outlook and some sales slowness, then immediately fled the scene to the tune of a nearly double-digit decline. Shares of AMZN stock tumbled from just under $340 per share to just more than $300 per share in one day. They were down more than 2% Monday to bring prices under $300 per share.

amazon-amzn-stockThe question, of course, is whether this is the sign of a shift in Amazon stock sentiment. Is this a return to a kind of “normalcy” that AMZN stock has never had to deal with — one where cold, hard profits are actually important to investors, as opposed to long-term potential?

If that’s the case, a downward trajectory for Amazon stock could continue. But if not, last week’s bloodbath could be a prime buying opportunity.

Alison Griswald at Slate pointed out, for example, that “analysts are now pointing to an ongoing deceleration in the company’s unit sales growth, which fell to 23 percent from 25 percent in the previous quarter, as possible cause for concern.”

But the folks over at Bernstein Research are laughing at the idea that this drop should keep Amazon stock fans up at night. They wrote:

“We think it is a poor metric for the health of the business as it does not capture, e.g., changes in average revenue per item shipped (selling a bag of Oreos is not quite the same as selling a Maserati), and mix shift towards higher gross margin categories such as apparel, or the growth of services such as Fulfillment by Amazon.”

Others have also laughed at speculation that this is the beginning of the end of AMZN stock as we know it. Rocco Pendola over at The Street didn’t mince words. He wrote:

“If you think the emergence of Amazon as retail’s disruptor and undisputed leader has been nothing but a Reed Hastings-like show of smoke and mirrors, you’re nuts. Bezos has a plan. And it’s working so well he would be dumb to alter it.”

And he might be right — but maybe AMZN stock holders will decide they’ve been at the mercy of his grand plans long enough, and are ready for results. As you decide what’s next and whether this dip in Amazon stock means it’s time to snatch up some shares to hold for the long haul, here are a few numbers behind last Friday’s bloodbath:

  1. Amazon announced that the loss for the current quarter could reach $455 million — a far cry from the operating profit of $79 million it posted last year.
  2. As a result, Amazon stock analysts are now predicting a 5-cent loss per share. For perspective, they were hoping for a 43-cent profit just three months ago.
  3. Net sales increased 23% during the first quarter of 2014, tallying $19.74 billion vs. $16.07 billion in the same period the year prior.
  4. Meanwhile, operating income declined 19%, from $181 million to $146 million, during Q1.
  5. Net income, on the other hand, grew from $82 million (18 cents per share) to $108 million (23 cents per share).
  6. That was right in line with analyst estimates, meaning Amazon stock investors have now gone four straight quarters without an earnings beat from the tech giant. Instead, AMZN has missed estimates two times and met estimates twice in the past four quarters.
  7. Those two earnings misses were pretty ugly, too. AMZN posted earnings of 51 cents per share during the fourth quarter of 2014, even as analysts were expecting 66 cents per share out of the holiday shopping season.
  8. After that earnings miss, which was coupled with a sales miss, Amazon shares plunged 11% in one day.
  9. Two quarters prior to that plummet, an Amazon earnings report showed a two-penny loss vs. an expected 5-cent-per-share profit. Still, those were the good ol’ days when EPS was shrugged off. Shares of AMZN stock managed to move higher despite the disappointment.
  10. This go-round, the earnings disappointment was actually a disappointment. In fact, a dozen Wall Street analysts lowered their ratings on Amazon stock in the wake of the report.
  11. Thanks to the selloff, Jeff Bezos lost $2.8 billion on Friday alone.
  12. Despite the tumble, Amazon stock still trades at about 460 times earnings.
  13. Nonetheless, AMZN stock has still gained about 17,000% since going public.

As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.

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