NEW YORK (TheStreet) -- Shares of Amazon (AMZN) - Get Amazon.com, Inc. Report are lower by almost 10% on Friday, after the company missed on top and bottom line estimates. TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, discusses the results.
This is a "classic freakout" Cramer said of the market's reaction to the company's fourth quarter results.
The stock price had rapidly accelerated into the report as optimism swelled over the holiday shopping season. But growth was not able to keep pace with the stock price, causing shares to tumble.
However, management said it is considering raising the price of Amazon Prime by $20 to $40. The current price is $79 for an annual membership.
Cramer said that the membership price rise will be like what happened with Costco Wholesale (COST) - Get Costco Wholesale Corporation Report, where it found that customers did not leave due to the higher membership costs.
This will allow Amazon to be more profitable, he said. The company's sales should also continue to increase.
Cramer also argued that Amazon is a "cult stock" and that the buyers will come back to it. "That's been the story" for the past $300, he concluded.
-- Written by Bret Kenwell in Petoskey, Mich.
Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.