Wall Street held few treats for Amazon.com ( 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.

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