Why Amazon.com and Pandora Media Will Fall Tomorrow

Stocks finished flat, but two big names fell sharply after hours.

Jul 24, 2014 at 10:00PM

Stocks finished flat today as investors struggled to interpret conflicting economic data and a slew of earnings reports that came out today. The Dow Jones Industrial Average (DJINDICES:^DJI) finished down three points, or 0.02%, while the S&P 500 gained 0.05%, and the Nasdaq edged 0.04% higher. 

There was more good news on the labor market front as initial unemployment claims fell to its lowest mark since Februrary 2006, dropping to 284,000 from 303,000, easily beating expectations of 308,000. Continuing unemployment claims also fell to 2.5 million, its lowest point since June 2007, yet another sign that strong job growth is continuing through July. 

In the housing sector, however, new home sales plummeted 8% to an annual rate of 406,000 in June, down from 442,000 the previous month, and well below expectations of 475,000. Activity in the housing market continues to be down from a year ago, despite strong growth in manufacturing and jobs this year, as new home sales are off 4.9% through the first half of the year, and new home inventory also increased last month, creating a lag in the market. Today's report caused homebuilder stocks to fall, and economists see the fading housing recovery as holding back overall economic growth.

Images

More high-profile earnings reports rolled in after hours today. Amazon.com (NASDAQ:AMZN) shares were down 10% in extended trading after the online giant posted a wider loss than expected. Amazon reported a per-share loss of $0.27, down from a $0.02 per-share loss a year ago, and worse than estimates of $0.15 per-share loss. CEO Jeff Bezos is famous for deferring profits in order to grow sales and build competitive advantages, but investors seem to be tiring of the company's breakeven results, as shares are now down 20% from a peak above $400 early this year. Sales grew 23% in the quarter to $19.3 billion, in line with estimates, as the company continued its torrid growth rate, and expanded several of its  businesses, most notably the introduction of the Amazon Fire Smartphone. Management guided an even wider loss for the current quarter, further frustrating investors, though the company is known for its conservative forecasts. At one point, sales growth was enough to push shares higher, but the stock appears to have reached a ceiling until the company can put up meaningful profits.  

Also falling sharply after hours was Pandora Media (NYSE:P), losing 10% after guidance in its earnings report was out of tune. In the past quarter, the Internet radio provider saw revenue jump 38%, to $218.9 million, matching estimates, as local advertising grew 144%, and mobile revenue, which makes up 76% of sales, improved 51%. Subscription growth slowed to 35% from 94% in the first quarter as the company lifted its monthly fee by $1, to $4.99. Bottom-line results were respectable, as well; the company earned $0.04 per share after adjustments, $0.01 better than expectations. For the current quarter, the online DJ expects to earn between $0.05 and $0.08 versus the analyst consensus at $0.08. Aside from that, guidance was essentially even with expectations, making the sell-off seem a bit puzzling. Though the stock is well off its 52-week highs, it remains pricey, and investors have a tendency to punish high-flying stocks for poor guidance, which seems to be the case here.

Who will prosper when cable dies?
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple.

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Pandora Media. The Motley Fool owns shares of Amazon.com and Pandora Media. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers