For the past couple of years Amazon.com (AMZN)
Chief Exexcutive Officer Jeff Bezos has told anybody who would listen that the company’s
ambitious expansion strategy requires it to invest now and think about
Of course, that’s also his message to investors: Buy shares of the
fast-growing but bleeding e-tail king now, and you will see a big return
somewhere down the road when it becomes profitable.
But as Amazon.com’s profitability continues to get pushed further into
the future, many investors are beginning to wonder whether “when” should
be spelled “if.”
After announcing Tuesday that record revenues for the Q4 shopping season
won’t cut into the company’s growing net loss, the market pounded Amazon.com
shares, sending them down 15 percent to 69 3/4 at the close of trading. The stock
fell some more Wednesday, trading at 67 1/8 in the mid-afternoon.
Indeed, the past year has been a white-knuckle ride for Amazon.com
investors. Optimism about company’s dominant position and rapid entry
into markets beyond books and CDs took Amazon.com over $100 per share last
April and December.
But in both cases the stock’s stay in triple-digit land was brief, and
its descent rapid, as investors focused with genuine concern on the
company’s ever-deepening losses.
Amazon.com’s announcement this week was merely preliminary; Q4 results
will be officially released on Feb. 2. Unless there’s some good news in
there that we didn’t hear about this week — like profitability for the
company’s flagship books division, which Bezos predicted last fall —
expect the market to deliver a double-whammy.