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Amazon Plunges: What Wall Street's Saying (Update 1)

Stocks in this article: AMZN

This story has been updated from 11:09 am EST to include a JPMorgan analyst's comments and refresh Amazon's stock price.

NEW YORK (TheStreet) - Amazon (AMZN) shares sunk 9.5% to $364.53 on Friday following the big e-retailer's disappointing earnings report last night.

The Seattle-based company said after the bell on Thursday that for the fourth quarter it earned a profit of $239 million, or 51 cents a share, up from $97 million, or 21 cents a share, in the year-earlier quarter. However consensus estimates were calling for earnings of 66 cents a share.

Net sales also came in shy of analysts' expectations, increasing 20% year-over-year to $25.59 billion. Wall Street was expecting sales to rise 23% to $26.06 billion, according to Thomson Reuters. Amazon said that excluding a $258 million impact from foreign exchange rates throughout the quarter, net sales grew 22% compared with fourth quarter 2012.

WATCH: Jim Cramer on Amazon: No Reason to Panic, Buyers Will Come Back

Wall Street got spooked last night not only from the earnings miss, but also because Amazon expects first-quarter net sales to range between $18.2 billion and $19.9 billion, or to grow between 13% and 24%, compared with the first quarter of 2013, below consensus expectations.

Investors are worried that Amazon may be foretelling its future, which given the large investments it has been making in everything from the cloud to warehouses to becoming an online grocery, doesn't sit well with them.

The other big piece of news from last night's earnings call is that Amazon is considering, for the first time, to raise prices for Amazon Prime, its popular two-day shipping service that it charges customers $79 per year. CFO Thomas Szkutak said on the conference call that given the combination of customers are using the service more and rising shipping and fuel costs, Amazon is considering upping the price between $20-$40 in the U.S.

Here's what Wall Street analysts are saying today about Amazon's earnings:

Eric J. Sheridan, UBS (Buy: $450 PT)

"In our view, Amazon's Q4 deceleration in revenue growth pushes us to lower the revenue re-acceleration curve in forward quarters. However, solid gross/operating margins support better trends in CSOI (consolidated segment operating income). The net of the two impacts is a slight reduction in our outlook and price target for Amazon - which was more than reflected in the ~5% stock drop in the after-market. Longer term, we believe the 20%+ revenue growth trajectory can be supported by growth areas such as AWS, Advertising, International markets, grocery/CPG, etc."

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