Amazon shares plunge after in-line earnings report

Good enough doesn't seem to be good enough for the e-commerce giant. While first-quarter profits met analyst estimates, slowing sales growth has investors worried.

By MSN Money Partner Apr 25, 2014 10:32AM

amazon.com boxesBy Jillian D'Onfro, Business Insider


Amazon.com (AMZN) reported its first-quarter earnings Thursday afternoon, and despite hitting earnings-per-share estimates and achieving a tiny revenue beat, its stock was down Friday morning by as much as 9 percent. Shares were down 8.8 percent, to $308, in early trading.


Business Insider on MSN MoneyOne factor could be that the company's sales growth fell to 23 percent in the first quarter, down from 25 percent in Q4 and 29 percent in Q3. That's not a big decrease, but investors wanted that number to get a boost this quarter. 


Amazon is largely judged by its ability to grow revenue since it doesn't have much in the way of profits. 


Investors are patient and don't mind the lack of profits, because they think Amazon is investing to grow the business. But when sales growth is decelerating it's worrisome. It suggests the investment isn't working out as well as they want. 

Operating income guidance of a loss of $455 to a loss of $55 million was also well below the street at $200 million. 


Overall, investors saw Amazon's quarterly results and were neither overly impressed (though both Amazon Web Services and International business outperformed) nor overly disappointed.


Unfortunately for Amazon, having nothing to be impressed about could be the reason for the stock drop, as investors would have preferred to see more growth. Amazon has always been a long-term-focused company, however. With big recent investments in video content and rumors of an in-house delivery service in the works and Prime memberships continuing to increase, the company might start seeing a bigger pay-off soon. 


Disclosure: Amazon.com CEO Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.


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