This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Sellers Paddle the Amazon

Wall Street held few treats for (AMZN) Wednesday, sending the Internet retailer's stock down 12% after a disappointing earnings report.

Shares of the Seattle-based company fell $5.52 to $40.65 in early trading after Amazon posted in-line third-quarter numbers and offered up a soft fourth-quarter forecast. Investors who had sent Amazon shares up 30% over the past year were quick to flee, reasoning that they've seen all the good news they're going to see for a while.

"We think that the good news on growth and the e-commerce holiday season is already in the stock," Deutsche Bank analyst Jeetil Patel wrote in a note to clients. He cut his rating on the shares to hold from buy and reduced his price target from $45 to $44.

"We expect Amazon's shares to be under pressure as the record-low incremental operating margins could drive multiple contraction that is not offset by higher estimates," wrote Goldman Sachs analyst Anthony Noto, who rates Amazon shares in-line, in a note to clients.

Amazon made $30 million, or 7 cents a share, for its third quarter ended Sept. 30, down from the year-ago $54 million, or 13 cents a share. Revenue rose to $1.86 billion from $1.46 billion a year earlier. Amazon also guided to a fourth-quarter operating profit of $175 million or so on sales of $3 billion.

The results apparently didn't allay investors' concerns about the slowdown in Amazon's growth amid concerns about consumer sentiment. The Conference Board's consumer confidence index fell to 85 for October, where economists had expected a rise to 88. The shortfall may indicate that consumers will cut discretionary spending this holiday season.

"There is no question that natural gas prices are going to remain high going into the winter season," said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, N.Y., which owns Amazon shares among its $800 million in assets. "I believe the whole market is worried about the consumer."

Amazon's disappointing guidance comes less than a week after eBay (EBAY) shares tumbled following similarly soft guidance.

Hilly Course
Amazon's ups and downs

During a conference call with analysts and investors Tuesday, Amazon Chief Financial Officer Thomas Szkutak offered an optimistic assessment of the company's prospects. He also pointed out that the company is continuing to invest in new products and services such as Amazon Prime, where customers can get free two-day shipping on their purchases for $79 a year.

"We are cautiously optimistic about Q4," he said. "It is, however, a seasonal quarter," he added, making predictions perilous.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs