Amazon Plunges: What Wall Street's Saying

NEW YORK (TheStreet) –– Amazon (AMZN) shares were plunging 11.8% to $316.22 this morning after the online retail giant reported its second-quarter earnings last night, with much higher losses than Wall Street had expected.

The Seattle-based company reported that its revenues increased 23% year-over-year to $19.34 billion this quarter, which matched expectations, according to analysts polled by Thomson Reuters. However, Amazon lost 27 cents per share, much worse than the consensus estimate of 15 cents. The net loss of $126 million was also significantly higher than last year’s net loss of $7 million.

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Third-quarter revenue guidance was in line with analyst expectations, but operating loss guidance was set at $810 million to $410 million, well above expectations of $25 million. The news sent the stock plunging as much as 12% in after-hours trading.

Here’s what several analysts on Wall Street had to say: Shares Plunge On Weak Earnings

Bank of America Merrill Lynch analyst Justin Pope (Buy, $400 PT)

“The 3Q outlook was disappointing and with growth not accelerating Amazon could become a show-me stock. Positive core items in 2Q that suggest investments may be working include higher gross margins, N. America EGM acceleration, and a growing base of Prime subs., and we think AWS remains an attractive business based on 90% usage growth. We are lowering our PO to $400 (from $420) based 1.7x 2015E sales due to a lower medium-term margin profile. Despite the expected controversy about Amazon’s investment posture, we continue to think Amazon is well positioned to capitalize on the secular growth of eCommerce, cloud computing, and mCommerce.”

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