Amazon (Nasdaq: AMZN) is the world’s most profitable online technology company, with a market capitalization of $273.56 billion at a share price of $583.16. However if you, like me, have been watching the stock price recently your pulse will be racing as the losses pile up. Just recently, Amazon released its Q4, 2015 earnings results and the figures missed the mark in a big way. Clearly, December retail sales were not quite what the world’s premier online retail giant expected them to be, and it is showing in the final quarter’s results. The earnings per share (EPS) came in at $1, versus the expected earnings per share (EPS) of $1.56. This is a major discrepancy for Amazon shareholders who were expecting so much more from this company. Since the actual earnings results were so much less than analysts’ predictions, Amazon stock plunged by 15% after the report was published and in after-hours trading.
How strong is Amazon’s earnings capacity?
Despite apparent weakness by having missed corporate earnings estimates, the company is surprisingly strong. It has posted strong profits in 3 successive quarters, and there have been solid gains in many business units of Amazon including its Amazon Prime Business service and its Amazon Web Services.
In 2015, no other company was able to compete with Amazon as the top performing entity in the S&P 500 Index (SPY). This year however, the stock has moved to the downside – as have many other technology and industrial stocks on major averages – and declines of 5% have been reported. The good news is that Amazon’s share price has doubled in the previous 12 months.
Does this mean that Amazon is a strong buy, a moderate by, a whole or a sell?
As an investor, the long-term earnings potential for Amazon is clearly bullish. As a binary option trader, you needn’t worry about appreciation of your investment over time – you simply trade on market news, corporate earnings, sentiment and speculation. Based on the fact that Amazon missed its quarterly earnings consensus estimate figure, it is a clear put option for binary options traders in the short term (1 minute trades or 1 hour trades). You may be wondering what aspects of the company are performing below expectations? Let’s take a look at some figures to gain perspective:
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