Financial Trading Blog
Stock of the day 22/07/2015 – Amazon.com Inc
Like its peers (if not in sector than certainly in prestige) Apple, Google and Netflix, Amazon.com has spent the year breaking, setting and breaking again its own record highs, with some pretty spectacular one-day jumps in the process. Yet things didn’t look so great in the first few weeks of January, as the stock fell from a 2015 opening price of $312.35 to a year low of $285.50 by the middle of the month.
Its fourth quarter results on January 29th, however, emphatically turned this around, with the stock soaring by over 12% to just shy of $350 (a mark it was to cross for the first time since July 2014 by the start of February) as Amazon announced $0.45 earnings per share against the $0.18 expected. A stellar holiday season helped sales increase 15% to $29.3 billion, whilst Amazon Prime subscriptions grew by 53%; $89 billion in revenue couldn’t prevent a $214 million loss in 2014, but after being frustrated by such results throughout 2014, investors appeared to be fully on board with these fourth quarter figures.
(Source: IT-Finance.com 22/07/2015)
A steady performance across February, March and most of April saw Amazon flitter in a $370 to $390 trading band, a band that was shattered with the company’s first quarter report. Just like it did following its Q4 2014 announcement, Amazon surged by 13.5% across the day before and day of its Q1 2195 results, lifting the stock to a then high of $452.53. Revenue saw a 15% increase to $22.72 billion year-on-year, whilst operating income saw a 74% jump to $255 million; yet the company still posted a net loss of $57 million on these figures, with the warning that these losses could increase as it continues the international rollout of its Prime delivery and video services.
Like the period following its fourth quarter results, Amazon settled into a solid $20 trading bracket after April, spending May and June (and the start of July) hovering between $420 and $440. This changed as July progressed, with Amazon seeing its best, non-earnings related, period of growth of the year, climbing from $429.90 on July 9th to an all-time high of $493.25 on July 20th; it is currently trading at $486.67 (IT-Finance.com, 22/07/2015). Much of this growth was based upon Amazon’s inaugural Prime Day on July 15th, an event designed to rival Alibaba’s Single’s Day successes, and one that Amazon claims saw around an 18% increase on worldwide order growth when compared to Black Friday 2014.
With the $500 mark in its sights, and the goodwill surge of Prime Day still behind it, Amazon is expected to announce a $0.15 earnings per share loss compared to a $0.27 loss year-on-year, alongside a jump in sales from $19.3 billion to $22.4 billion. Investors will also be keen to hear about the progress of Amazon Prime subscriptions and the growth of its Amazon Web Services division, the latter being a welcome surprise in the first quarter. Amazon.com has a consensus rating of ‘buy’ with an average target price of $465.21.
Mining stocks dominated the losers’ pile this Wednesday, with the latest declines for copper, platinum, palladium and gold creating yet another headache for stocks like Rio Tinto, Anglo American, BHP Billiton and Vedanta Resources. The anxiety ridden sector isn’t benefiting from the interest rate chatter in the US and the ever-present threat of more Chinese market instability or a worsening of the country’s economic slowdown. The oil sector isn’t exactly faring much better, with similarly heavy losses for BP and Shell.
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