Amazon made more money last quarter — $482 million in profit for the fiscal Q4 2015 — than it did during every previous quarter combined since Q3 2011. That $482 million figure exceeds Amazon’s previous quarterly record, when, in Q4 2010, it earned $416 million in profit.
So why, then, did the company’s stock tank by more than 13 percent after reported earnings results today?
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Analysts had expected Amazon to report $35.93 billion in revenue and $1.56 or more earnings per share. Amazon itself expected revenues to range between $33.5 billion and $36.75 billion. Depending on who you asked, specific profit estimates ranged from $546 million to $754 million.
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Amazon’s business philosophy goes something like this: When the company makes money, it reinvests that money right back into the business. Amazon has always been upfront about this plan, and investors are cool with it — except when they’re not.
This practice is the cause of Amazon’s never-ending expansion story, as retail behemoths struggle to keep up. It’s also the cause of this absolutely ridiculous-looking profit chart.
[graphiq id=”e1iLMDl8Esd” title=”Amazon.com Inc. (AMZN) Quarterly Net Income” width=”650″ height=”490″ url=”https://w.graphiq.com/w/e1iLMDl8Esd” link=”http://listings.findthecompany.com/l/19215472/Amazoncom-Inc-in-Seattle-WA” link_text=”Amazon.com Inc. (AMZN) Quarterly Net Income | FindTheCompany”]
But when you consider Amazon’s steady revenue growth and fruitful investments (take AWS, for example), the plan looks less crazy.
[graphiq id=”1ENeDZYimPz” title=”Amazon.com Inc. (AMZN) Quarterly Revenue” width=”650″ height=”526″ url=”https://w.graphiq.com/w/1ENeDZYimPz” link=”http://listings.findthecompany.com/l/19215472/Amazoncom-Inc-in-Seattle-WA” link_text=”Amazon.com Inc. (AMZN) Quarterly Revenue | FindTheCompany”]
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Thus, for Amazon, profit usually isn’t the point. And it certainly isn’t the point today, as investors have shown so far in after-hours trading.
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