Shares of Amazon (AMZN) have continued to fall since Oct. 27 when the ecommerce giant reported disappointing third-quarter earnings, but the drop offers an opportunity to long investors and those who can spot trends to jump in.
Amazon's quarterly earnings came in at 52 cents a share, missing analysts' forecast of 78 cents a share. The stock has fallen more than 8% since then.
But Amazon has been able to show strong growth over the previous six quarters. This is impressive because the company operates in a highly competitive market and has made a big push into the media business.
Moreover, Amazon's meteoric rise from street corner bookstore to global giant is fueled by the fact that it keeps pushing for new frontiers.
For instance, the company recently made the brave decision to bring Amazon Prime to China by offering an attractive first year price of $28. Interestingly, the Chinese commerce market is dominated by Alibaba and JD.com.
Investors don't expect Amazon to dominate in China over the next few years, nor is that necessary. China has a rapidly growing middle class population with high disposable incomes.
This combined with China's high adult population means that a substantial slice of the ecommerce pie would be game-changing for Amazon's revenue figures. It is worth noting that Amazon isn't starting from square one in China but going in with substantial knowledge of delivery and logistics.
Meanwhile, third-quarter sales in the company's Amazon Web Services cloud business shot up by 55%. AWS is a key growth driver for Amazon because automation and big data is a rapidly growing industry.
Amazon's Alexa Internet data analytics business also continues to grow well and provides the ecommerce giant with the chance to collect detailed data on customers.
In addition, the AmazonFresh grocery service is being expanded to Chicago, Dallas and London.
Notably, investors were expecting Amazon Prime Air drones to have taken flight by this point in the year. However, it looks like that will happen in the second half next year.
The drones will help make Amazon's fulfillment process more efficient and allow the company to save money.
Furthermore, in an effort to have greater control over logistics, Amazon recently purchased some Boeing 767 cargo jets.
Recently, Amazon has invested heavily in equipment and research and development. However, these are costs with long-term benefits.
Amazon has been able to grow each year because of its their long-term approach and quick execution of innovative ideas.
The company's earnings miss and weak forecast for holiday sales is leaving some investors worried that the company has hit a plateau. This is half correct, because Amazon's year-over-year growth couldn't continue forever.
What is interesting is that Amazon still has some under-developed growth opportunities
These include the Amazon Echo hands-free speaker, which provides an opportunity to collect unprecedented data on customers' lifestyle and shopping habits. As a result, product recommendations can be more accurate and timely.
In order to get this product into as many homes as possible, Amazon is pricing the cheaper variant Echo Dot at $49.
Meanwhile, Amazon has been able to build a compelling Prime package that has attracted 65 million U.S. Prime members who are forecast to collectively spend $78 billion this year.
Notably, Prime members reportedly spend twice the money that non-Prime members do.
And Amazon is gearing up to add more original programs such as the Grand Tour. Moreover, Amazon will expand its music streaming service in order to better compete with the likes of Spotify.
The compelling entertainment package draws people in so that Amazon can make significant profit on items such as clothing.
Speaking of clothing, Amazon is gearing up to increase market share in the fashion industry. Amazon commands 6.6% of the U.S. fashion industry through its own brand items.
Amazon owns seven fashion brands targeted at different market segments.
Unlike its competitors, Amazon has the advantage of having one of the most visited homepages on the web, plus a growing volume of data on customers. As a result, Amazon is able to promote styles that stay on-trend and hit the mark.
The question really is, when will Amazon run out of ideas?
Long-term investors should buy the stock now.