Amazon shares plunge as record profit still misses estimates

Amazon.com Inc posted its most profitable quarter ever but the world’s No. 1 online retailer still managed to disappoint Wall Street by badly missing estimates, sending its shares down more than 13 percent in after-hours trading. The results, as well as the company’s determination to invest more in new areas and its extremely low profit margins, brought back perennial questions for investors about the company’s ability to consistently earn money. “By comparative retail standards, Amazon’s level of profitability is still painfully weak,” said Neil Saunders, head of retail analyst firm Conlumino, who is still positive on Amazon’s prospects. “For every dollar the company takes, it makes just 0.75 of a cent in profit.” Amazon’s net profit for the fourth quarter, which includes the holiday shopping season, rose to $482 million, or $1.00 per share, in the quarter ended Dec. 31, up from $214 million, or 45 cents per share, a year earlier. That figure was held back by rising operating costs. It was well below analysts’ average forecast of $1.56 per share, according to Thomson Reuters I/B/E/S. The company’s shares plunged 13 percent to $551.50 after hours on Thursday, following a 9 percent increase in regular trading. They are still up 80 percent over the past 12 months. Amazon notched its third consecutive profitable quarter for the first time since 2012, but it still left Wall Street wanting more. “The growth story that investors were looking for… clearly Amazon has not been able to live up to the hype,” said Adam Sarhan, chief executive of Sarhan Capital. Reuters