Amazon’s stock tanks 13% despite record $482 million profit

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?

[aditude-amp id="flyingcarpet" targeting='{"env":"staging","page_type":"article","post_id":1868602,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,commerce,","session":"A"}']

Despite a profit surge driven by holiday sales (which weren’t as strong as expected) and the continued growth of Amazon’s cloud business (AWS), Amazon reported $35.75 billion in revenue and $1.00 earnings per share for the quarter — missing analysts’ estimates in both cases.

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.

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”]

[aditude-amp id="medium1" targeting='{"env":"staging","page_type":"article","post_id":1868602,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,commerce,","session":"A"}']

 

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.