Business

Red is the new green for Amazon shareholders (despite these relevant, unanswered questions…)

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Amazon posted yet another loss today, its third time in the red over the last five quarters. The company reported a loss of 9 cents per share in its Q3 2013 earnings report for a net loss of $41 million, which is slightly better than analysts expectated.

Naturally, I checked to see if the stock price rose heading into the mostly useless Amazon shareholders call, and indeed it had a gain of 8.1 percent to $359.00in after hours trading. (The stock price is still hovering around that price at the time of publication.) But it makes you wonder: Is Wall Street stupid in general, or is it just Amazon investors?

The positive impact on shares likely has to do with Amazon continually showing growth compared to the previous year. Amazon’s revenues were up 24 percent to $17.1 billion compared to the same period last year. The company also increased its efforts to sell groceries via AmazonFresh, rolled out a new “Login and Pay with Amazon” service, and debuted a new line of Kindle tablets and e-readers.

So Amazon has no trouble proving that its growing the business overall. And if you’re looking to see how confident the company is that its high growth/no profits strategy will eventually become lucrative, look no further than its decision to boost the number of seasonal employees it plans to hire this year by 40 percent. That seems to be enough to instill confidence in its shareholders.

But Amazon shareholders still aren’t demanding nearly enough information from the company to make sure its various unconventional strategies (Prime memberships, Kindle Fire loss leader, etc.) are working — as well as how much Amazon is on the hook for each of those strategies.

Also, I’d be particularly concerned with rumors of Amazon’s plans to launch both a smartphone and a set-top box, because we still don’t know how well its Kindle Fire loss leader strategy is doing. (I guess we’re supposed to assume that Kindle Fires are making the company tons of money if Amazon wants to produce more hardware products. That’s quite a bit of good faith.)

Here’s a list of things Amazon either didn’t mention or address via the earnings call:

  • How much revenue is Amazon generating from Kindle devices?
  • How many Prime memberships did the company add in Q3? (Earnings report says “millions” signed up, but how many stuck around after the first free month?)
  • How many Kindle devices did customers purchase in Q3? YOY growth? anything?
  • What about a breakdown of revenue from digital media sold by Amazon?
  • Any update on sales stats from Amazon’s physical media to digital media (AutoRip, Matchbook)?
  • Consumption stats for the “free” videos available through Prime Instant Video? And…
  • Are people watching the content that Amazon is paying huge licensing fees for?
  • What is Amazon’s strategy for lower education, including its recent purchase of TenMarks?
  • What’s the deal with LivingSocial?
  • How did the U.S. government shut down impact your AWS contract?
  • What does Jeff Bezos do while everyone is listening to the earnings call?

And perhaps the biggest topic that wasn’t really discussed in any detail was the impending competition from Alibaba as well as Alibaba-backed ShopRunner. Although some analysts did inquire about Alibaba’s plans impacting Amazon on the call, we didn’t get much of a response.

For those who care, here’s the full Q3 2013 earnings report.


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