Amazon’s Q3 financials: overwhelmingly up…and the stock went down

Amazon’s Q3 financials: overwhelmingly up…and the stock went down

You gotta love investors: for them, every silver lining has a cloud.😉

I’m just kidding…I would never pretend to be qualified to judge investors. I’m definitely a layperson there. I would much rather have a reliable 3% than take a shot at 10% or nothing. I love playing games, and I can be a risktaker there. When my family goes to the racetrack for holidays (which we do), I actually follow a risky strategy. We all just bet essentially a minimum ($5 a race) and we split winnings. I bet some long shots…and might win one long shot out of eight races (but win maybe $30).  I’m typically close to break even at the end of the day (but we definitely come out ahead socially, with all the time to talk to family we may not see that often). Our now adult kid had a system growing up that would win virtually every race…but small amounts. We usually come out pretty close between the two of us. Family finances, though? I want predictability and reliability, not great for at stock player.

It feels to me, though, like some investors are like some managers (and I’ve trained managers). They suspect that everyone is hiding negative things, and if they get the slightest hint that something is bad, they assume they’ve uncovered previously hidden mass failure/corruption.

Amazon announced their third quarter financials yesterday:

Generally, things were very good. Sales year over year (comparing this quarter in 2016 to the same quarter in 2015…y/y) were up 29%. Net income more than tripled.

Yes, in the international segment, net income was down, while sales were up…I believe that’s largely due to investment in India.

Amazon invests…a lot. During an investment phase, you spend more money, with the intent to make more money as a result (that’s basically what investment means). Amazon is always in an investment phase somewhere. After more than a decade, that is now paying off in North America. They’ve made very few investments which didn’t pay off eventually (the Fire Phone being a notable exception, as well as an early auction site…but those are more than matched by successful investments).

According to this

CNN Money graph

the stock lost value yesterday…although it is up more than 20% for the year.

The stock loss may be more of a reaction to Amazon not doing as well as people expected…that’s what the blogosphere says.

As what should probably be the Amazon Investors webpage motto would say: “Give it time.”😉

Now, the press release did something the conference call didn’t do this time (which was interesting)…it bragged about Amazon’s developments.

This short excerpt had one of the most intriguing parts for me:

“Alexa may be Amazon’s most loved invention yet — literally — with over 250,000 marriage proposals from customers and counting,” said Jeff Bezos, founder and CEO of Amazon. “And she’s just getting better. Because Alexa’s brain is in the cloud, we can easily and continuously add to her capabilities and make her more useful — wait until you see some of the surprises the team is working on now.”

A quarter of a million people have proposed marriage…to an artificial intelligence construct.🙂 People have loved their cars…but I don’t think “marriage” best describes that relationship.😉 Marriage implies a component of intellectual and emotional exchange, and demonstrates that people think of Alexa as a “social actor”.

Those surprises? There are two directions: more capabilities and more access to capabilities. I think we’ll see both…Alexa in more places, and more things it can do. They’ve just directly connected the

Logitech Harmony Home Control – 8 Devices (White) (at AmazonSmile*))

I need to test that out yet, to see if it has more capabilities than what I do now going through IFTTT (If This Then That).

Alexa still needs to control my

Amazon Fire TV (at AmazonSmile*)

directly through the Echo…although they gave it a lot more voice control through its own voice control.

One thing that won’t be a surprise is a social chatbot…that’s the goal of the current

Alexa Prize competition

although we won’t see the results of that for more than a year.

In the press release, Amazon did talk about e-books and reading devices…that’s a good thing.🙂

Of course, the retail segment is just a part of what Amazon does…there may have been more concern about competitors to AWS (Amazon Web Services); that came up in one of the questions.

I’m sure many of you are wiser about the stock market than I am: what do you think? Feel free to tell me and my readers by commenting on this post.

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* I am linking to the same thing at the regular Amazon site, and at AmazonSmile. When you shop at AmazonSmile, half a percent of your purchase price on eligible items goes to a non-profit you choose. It will feel just like shopping at Amazon: you’ll be using your same account. The one thing for you that is different is that you pick a non-profit the first time you go (which you can change whenever you want)…and the good feeling you’ll get. :) Shop ’til you help! :) By the way, it’s been interesting lately to see Amazon remind me to “start at AmazonSmile” if I check a link on the original Amazon site. I do buy from AmazonSmile, but I have a lot of stored links I use to check for things.

 

3 Responses to “Amazon’s Q3 financials: overwhelmingly up…and the stock went down”

  1. Phink Says:

    I consider myself mid level knowledge wise when it comes to the stock market. I am not a novice but am not Warren Buffet either. I do know one thing for certain. Wall St. ALWAYS, yes ALWAYS, overreacts to both good and bad news. I bought PetMed Express once because it fell by….I can’t remember, high single digits or low double digits, in one day. The reason was because of a bad quarter on sales. But, they are debt free, they have incredibly low labor cost, they make good profit every single quarter etc. etc. I bought them probably two years ago I’m guessing for low $12’s a share and in a few months it was $16 or so and now sits just under $19 and has a dividend of almost 4%. I think it was close to 5% when based on $12 a share when I bought it. Now think about that. That is a 5% return simply on dividends plus increases in value, if it increases.

    My point is Wall Street is too jittery and I am not smart enough to figure out why that is. I look at situations like above as stocks being on sale. I am too poor to take advantage of stock sales most times but if I ever had $1 million I’d invest in companies like PETS, XOM, etc that have good dividends and I’d make roughly $50,000 a year in dividends and leave the money alone. Dividends are not guaranteed of course but I feel very safe with trusting Exxon will pay dividends my entire life.

    • Bufo Calvin Says:

      Thanks for writing, Phink!

      I’d go for index funds, myself. The only interesting thing for us there is that we’ve told people we didn’t want to invest in certain companies, even if that meant our return was lower…that’s baffling to some advisors.🙂

      • Phink Says:

        No I understand. While I believe an adult has the right to smoke I’d never invest in a tobacco company myself because I would not want to profit from a product that no doubt increases the chance of cancer by leaps and bounds.

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