Amazon misses profits, but analysts stay bullish

A steeper-than-expected drop in quarterly profit rattled some Amazon.com investors, but Wall Street analysts remained largely bullish about the company’s aggressive spending plans.

This remains one of the most amazing trends in the tech industry. No matter what happens to Amazon, analysts stay bullish. Any other company would be trying to explain that everything is okay, but Amazon gets a free pass every quarter.



  • upright

    I think it’s because Amazon has never said anything different — investors are used to this sort of thing. Not sure that’s a good thing, but Amazon has been consistent in it’s long-term approach.

  • Mo

    Amazon is a disruptor-darling. It doesn’t have to carry Apple’s decades of underdog history and second-guessing.

  • Sigivald

    I dunno, the more amazing trend might be that “Apple analysts keep saying stupid Macalope-worthy things on the Internet”.

  • The Cappy

    That’s because they’re killing off their competition. Eventually there will be no one else in the retail space.

  • Cranky Observer

    Matthew Yglesias’ take is a bit old but still seems to hit the mark:

    http://www.slate.com/articles/business/moneybox/2014/01/amazon_earnings_how_jeff_bezos_gets_investors_to_believe_in_him.htmlThis image of a firm that remains a darling of Wall Street despite a lack of profitability is tempting. But the truth is more likely the opposite. Amazon doesn’t turn a profit because it’s a darling of Wall Street.I once characterized Amazon as a “charitable institution being run by elements of the investment community for the benefit of consumers.” Bezos took issue with this in a letter to shareholders. His argument is that Amazon isn’t a charity; it’s a business—a business whose strategy is to make its customers as happy as possible. And that, fundamentally, is what makes Amazon great. Profits are in severe tension with the idea of pleasing customers—a profitable firm is, by definition, charging customers more than it needs to.But of course, there’s a reason that most companies try to make healthy profit margins: financial markets demand it. Only a Wall Street darling, a firm whose senior leadership has the confidence of markets, could get away with being as daring as Amazon is.
    • johnnygo

      Thanks for the link. I think the article nails it. The causality is WS darling hence no profits needed. Just like our friends over at Tesla…

  • I suspect investors are playing along game. Which is so weird since they normally seem to be allergic to long-term thinking. But in this case, they are waiting for Amazon to wipe out all the competition and then start jacking up prices. And of course, with the Feds for the past 10 years dealing with Amazon’s faults by punishing Apple doesn’t help.

  • StruckPaper

    “Amazon gets a free pass every quarter.”

    Not every quarter. Check their history going back to late 2015, early 2016. And again early 2014. Don’t skim over facts to fit your thesis.

    • James Wesolowski

      Relative to other companies of its size and age, yes, every quarter. This is a company that is valued at $500 billion yet remains persistently only minimally profitable. Amazon’s net income from 2013-2016 was about $3 billion, compared to about $160 billion for Apple and $63 billion for Google/Alphabet. Best case scenario Amazon puts everyone else in retail out of business and are then broken up as a monopolist. Pure stock games until then.

  • David Taylor

    Dreadful article. It betrays no understanding of Amazon’s strategy. They purposely keep the profits low to avoid taxes. The re-invest constantly and they make prices so low it kills competitors. They say that they will do this but the “analysts” always whine and complain.

    • Kip Beatty

      That’s about the sum of it. It’s been Amazon’s MO for years now. Analysts know, if they chose to, Amazon could show a massive profit the following quarter. It’s all how they manage their books and use their money. As long as revenues keep growing, they’ll remain immune to much investor scrutiny.

      Remember, with Wall Street and investors it’s never about what have you done for me today, it’s about what are you going to do for me tomorrow. Investors are so skittish about Apple at times, regardless of their stellar quarterly results, because they fear the iPhone gravy train will end soon. Eventually they’ll be right, but they’ve been wrong for years and have lost a fortune of their clients money as a result.