Why Amazon Shares Soared

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of (NASDAQ: AMZN  ) were stunning the market today, closing up 9% higher after topping sales estimates in its third-quarter report, and hitting an all-time high.

So what: The all-and-sundry online retailer continued to grow at a blistering pace, as revenue increased 24% in the quarter, or 26% in constant currency, to $17.09 billion. Analysts had expected sales of $16.7 billion. Amazon reported a quarterly loss for the quarter at $0.09 a share, but the market long ago stopped worrying about the online behemoth's bottom line, content to see its market power and reach grow instead. CEO Jeff Bezos touted the company's new releases of the Kindle Paperwhite and Fire, as well as its new video tech-support service, Mayday, while the company's guidance was so broad and conservative as to be essentially useless.  

Now what: Amazon's sales may be growing faster than the speed of light, but every time the stock moves up like this, its valuation seems harder to justify. Still, the market seems unconcerned with that anomaly. Amazon is a unique company with a monopoly-like position in online retail, and commanding positions in other areas such as e-book publishing, digital media, and cloud computing services. On top, it has the wherewithal to bring everything together with its Prime service offer, giving it an even stronger competitive advantage. Who knows what the future holds for Amazon, but every jump in sales translates into increased switching costs, and greater networking effects, as the company moves closer to its goal of same-day delivery, which would be a game changer. Its valuation may make observers scratch their heads, but I wouldn't bet against it.

Stocks for the long haul
The best investing approach is to choose great companies and stick with them for the long term. That's why The Motley Fool's named Amazon as one of "
3 Stocks That Will Help You Retire Rich" in our report that also comes with some winning wealth-building strategies that every investor should be aware of. To find out what the other two stocks are just click here now.

Read/Post Comments (1) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 25, 2013, at 6:32 PM, foolsmate wrote:

    An open message to Jeff Bezos.

    Please, please, please Jeff!!! PLEASE BUY EBAY, get rid of Donahoe and make 100 million users throughout the world smile. :-)))

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2700633, ~/Articles/ArticleHandler.aspx, 9/24/2016 10:02:28 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:00 PM
AMZN $805.75 Up +1.05 +0.13% CAPS Rating: ****