Investors punish Amazon again
After posting widening losses, Amazon has taken a pounding on Wall St, raising doubts that investors will support CEO, Jeff Bezos’ strategy of putting investment ahead of profit.
The shares tumbled 8.3 per cent on Friday to close the week at $287.06, having slid some 28 per cent from highs earlier this year.
Amazon said on Thursday its loss in the last quarter widened to $US437 million ($A472.82 million) after a series of product launches including new phones, tablets and television programs.
The news from the online retail giant, which is known for keeping profit margins low as it grabs market share nonetheless stunned many.
“Frustration with Amazon is reaching peak levels,” said Deutsche Bank analyst, Ross Sandler.
“We are struggling to identify a catalyst to break the negative momentum.”
The loss in the third quarter was worse than anticipated, and far worse than the $US41 million deficit in the same period a year earlier.
The loss came even as net sales increased 20 per cent from a year ago to $US20.58 billion in the quarter.
“We see further downside risk to the stock,” said Barclays analyst, Paul Vogel.
Vogel said Amazon’s aggressive spending and soft growth outlook “may be too much for everyone but the most patient of investors”.
Shilpa Rosenberry, analyst at the research firm Daymon Worldwide, said Amazon is facing challenges at it tries to expand globally and goes up against new challengers like China’s Alibaba.
“While they’re scaling fast internationally they’re very challenged, especially as they’re entering emerging markets where competitors like Alibaba have an advantage,” she said.
The US holiday season will test Amazon because “traditional brick and mortar retailers are stepping up,” she said, warning that rivals like Target will offer free shipping without minimums.