After the market close, the e-commerce giant reported net income that more than doubled year-over-year to a record $482 million, or $1 per share, but nonetheless was short of analysts' expectations for $1.56 per share.
Revenue increased by 22% to $35.75 billion, but was pressured by the strong dollar and missed estimates of $35.93 billion for the quarter.
The company's operating costs were up 21% to $34.6 billion, as CEO Jeff Bezos struggles to balance Wall Street's desire for profits with his own aspirations to use technology such as drones and smart household gadgets, Bloomberg notes.
Analysts blamed the disappointing financial results on Amazon.com's rising costs to deliver goods, which was up 24.4% to $4.5 billion year-over-year, Reuters reports. The analysts are unsure why the company plans to purchase assets such as trucks and lease jets, and are fearful of further investments the company might make to compete with shipping companies such as UPS.
"By comparative retail standards, Amazon's level of profitability is still painfully weak," Neil Saunders, head of retail analyst firm Conlumino, told Reuters. "For every dollar the company takes, it makes just 0.75 of a cent in profit."
Wedbush Securites added that shares are plummeting because analysts' forecasts for next year are too high, Reuters adds.
Insight from TheStreet Research Team:
Jim Cramer mentioned Amazon.com in a recent Real Money post. Here is a snippet of what Cramer had to say about the stock:
Makes some sense. But who the heck knows, with Amazon? It's a very emotional stock, in a market with a terrible mood disorder that just lost its high-growth compadres in biotech, as well as Tesla (TSLA) and perhaps Netflix (NFLX). When I went through the conference call, I actually liked what I heard. It was no Facebook. But to call it subpar would be stupid.
There are so many stupid things happening in this market, that it takes my breath away. Yes, Facebook was terrific, and it does sell for only 20x 2018 numbers.
But who the heck knows what Amazon sells at? It sells for some sort of number that is inscrutable and is in the eye of the beholder. I looked at it and thought it would please some of the momentum hounds who want to buy it, but the current shareholders are clearly let down by the company not saying this is the beginning of the big run. Maybe the momentum guys wanted Amazon to say that there they are going to take over the world by the third quarter?
-Jim Cramer "Cramer: Amazon Is an Emotional Stock in a Market With a Terrible Mood Disorder" Originally Published on 1/29/2016 on Real Money.
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Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C.
Amazon.com's strengths such as its compelling growth in net income, robust revenue growth and largely solid financial position with reasonable debt levels by most measures are countered by the company's disappointing return on equity.
You can view the full analysis from the report here: AMZN
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.