NEW YORK (TheStreet) -- Shares of Amazon (AMZN) 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), 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.