We noted in our coverage last Friday that analysts had pretty much left Buy or Outperform ratings on the stock, but fiddled with their target prices.
It seems that Monday’s weaker performance is related to overall weakness in the tech momentum stocks like Pandora Media Inc. (NYSE: P), which is down nearly 20% in the past five trading days mostly due to a collapse last Friday after reporting weak earnings Thursday night. We may not view Amazon as a momentum play after 17 years on the public markets, but its high forward P/E ratio — nearly 84 — and its trailing P/E ratio of around 460 really tell a momentum story.
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Amazon is spending heavily on streaming video, including original productions and an over-the-top box, local delivery services and, some people say, an Amazon-branded smartphone. None of these is cheap, and the company has forecast a loss of $55 million to $455 million in the current quarter to pay for them.
Over the long-term, Amazon may be making the right moves, and if an investor believes that to be the case, the stock is pretty cheap today. Alternatively, some may see the company’s current quarter estimate as the first in a string of quarterly losses that could last through the rest of this year.
Shares were down more than 3% at $293.75 in the first 90 minutes of trading Monday. Volume was already about 50% higher than the daily average of 4.9 million shares traded. The stock’s 52-week range is $245.75 to $408.06.
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