What to Expect from Amazon
After the market’s closing, next Thursday Amazon Inc. (NASDAQ:AMZN) is going to publish its second quarter earnings.
According to the recent news reported by The Economic Times, Amazon.com has announced its intention to splurge $5 billion to strengthen its presence in India by the end of 2015: Instant videos and subscriptions for Amazon Prime services, its warehouses and data centers in one of its largest markets outside the US.
Furthermore, SunTrust research analyst, Robert S. Peck stated that prime adoption continues and Prime Now is available in seven US cities and recently in London. The Channel Advisor data supports around 26% of North American electronics & general merchandise (EGM) growth for the period, compared to firm’s estimate of 24%. While commenting on AWS Summit, Mr. Peck noted that AWS’ steep price cuts from March ’14 reduced growth by around 20% last year.
The bears’ case is understandable from a fundamental standpoint, as a company traditionally does its best to maximize the profits it can earn. They have argued that the spending is out of control and that Amazon is unable to turn its growing revenue into any material profit for its stockholders. But this strategy is precisely what makes the company so attractive going forward.
Analysts tend to agree with this overall bullish sentiment in the long-term. A number of firms have upgraded the stock recently, with analysts from UBS upgrading the stock to buy and setting a target price of $550, largely due to the increased spending coming from Prime customers. This helped the stock price jump to new all-time highs.