Amazon’s Plunging Stock Is Still Worth Buying, Analysts Say

Amazon’s Plunging Stock Is Still Worth Buying, Analysts Say

Amazon’s Plunging Stock Is Still Worth Buying, Analysts Say

Stocks dropped on Friday after tech giants including Amazon reported lackluster earnings, continuing an October rout that's pushed hundreds of stocks into so-called "bear" territory.

Amazon on Thursday reported third-quarter earnings that were more than $2 a share better than analysts had forecast.

For the quarter, Amazon reported per-share earnings of $5.75, up from 52 cents a year earlier and easily beating Wall Street's expectations of $3.14, according to Yahoo Finance.

The company showed slowing revenue growth in all categories quarter over quarter, including online sales and subscription sales, Amazon Web Services sales and its fast-growing advertising business.

Now that the Seattle-based firm has devoured retail players like Borders, Sears and Toys "R" Us, it is facing bigger challenges from multinationals who are making substantial investments to compete, D.A. Davidson & Co analyst Thomas Forte said. "Investors are waiting for more visibility for things to see where the rotation takes them", said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.

Shares down here, 2.9%. Amazon is looking to be on track to do $10 billion in advertising sales in a calendar year if this quarter is anything to go by.

"We don't see any real structural issue with Amazon but almost every line in the business is decelerating a tad, and we typically see another deceleration in retail in 4Q, hence are struggling to identify a catalyst", Sandler said. Lower ad pricing to contend with antitrust concerns, new privacy rules in Europe and increased competition from Amazon.com Inc may have played a role too, financial analysts said.

"They are anxious about the macro". So far, Amazon has said that hasn't happened. In a statement, Bezos said, "Amazon Business has now reached a $10 billion annual sales run rate and is serving millions of private and public-sector organizations in eight countries". After blazing a path beyond $2,000 earlier this year, imputing a valuation of the company of $1 trillion, the stock price has fallen back a bit as tech stocks overall continue to get pummeled this fall.

Investors are anxious about the weak profit outlook and the increased pace of spending, said RJ Hottovy, an analyst at research firm Morningstar.

Alphabet has committed to providing cloud computing services and selling hardware over the last few years.

Operating cash flow increased 57 percent to $26.6 billion. Amazon's cloud business saw a 46 percent rise in revenue to $6.68 billion, only narrowly edging past estimates of $6.67 billion.

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