NEW YORK (TheStreet) -- Show me the profits! That was the message Amazon (AMZN - Get Report) investors on StockTwits had for CEO Jeff Bezos after the e-commerce giant announced first-quarter sales that topped Wall Street estimates, but also reported declining operating income, fueling doubts about Amazon's valuation.
$AMZN mrk cap 150 bln it means they must earn around 10 bln in future, could they do it? 10 with margin 4% they need to get 250 bln sales-- kh (@khmusabaev) Apr. 24 at 05:38 PM
Amazon net sales grew 23% year-over-year to $19.74 billion in the first quarter. That beat analysts' calls for $19.42 billion, according to the Analyst Ratings Network. Earnings per share increased 5 cents from the same period last year to 23 cents, meeting analyst expectations. But, operating income declined 19% in the quarter from the same period a year ago to $146 million.
In the company's guidance, management told investors to expect worse operating income in the near future. Management guided for an operating income loss of between $455 million and $55 million. Net sales should fall between $18.1 billion and $19.8 billion, according to the press release. The mid-point of that number is just shy of the consensus estimate of $19.03 billion, according to stats on Yahoo! Finance.
Amazon's stock fell sharply from an initial pop in after-hours trading. Shares dropped more than 5% in the premarket. Amazon trades at more than 80 times expected 2015 earnings. Sentiment on the stock is divided, with 53% of the crowd calling for gains and the other 47% anticipating declines, according to StockTwits analytics.
Though Amazon reported strong sales growth, investors on StockTwits expressed fatigue with the 20-year-old company's startup mentality. They said Amazon should stop pouring money into new entertainment businesses that compete in Netflix's (NFLX) and Apple's (AAPL) backyards. Instead, the company should focus on expanding margins and becoming more efficient with its bread-and-butter e-commerce business.
$AMZN costs keep rising and margins keep shrinking.-- David Trainer (@dtrainer_NewConstructs) Apr. 24 at 05:08 PM
See limited upside on a DCF eval. $AMZN needs >15% rev growth for 10+years, plus margins to increase to 5% from <0.5%. to support $350.-- Chris Marc (@chris00nj) Apr. 24 at 08:38 PM