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What to Expect from Amazon

What to Expect from Amazon

After the market’s closing, next Thursday Amazon Inc. (NASDAQ:AMZN) is going to publish its second quarter earnings.

New Markets

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.

Analyst Opinion

Analysts at Cowen have upgraded the online retailer’s rating to Outperform, while increasing the target price from $435 to $565 ahead of its second-quarter earnings. Cowen believes that the online retailer is currently winning in the large retail and tech markets, given its long-term investments.

According I Know First Research, Opinion on this stock is extremely split between bulls and bears with very little in between. The bears point to the lack of profits that the company has been able to generate in recent years. The lack of profits is especially upsetting to detractors because the company’s revenues continue to increase, growing at a steady pace over the past five years.

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.

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