What’s Going On Here?

Amazon’s 4th quarter weaved beyond investors’ expectations, helping the company’s stock price punch 10% higher.

What Does This Mean?

• Total revenue at Amazon grew 21% last quarter, much more than investors expected.
  • The record holiday sales season probably helped, with unprecedented US store closures last year potentially leaving some Main Street shoppers with little alternative but E Street.
  • Revenue at the company’s highly profitable cloud computing arm also grew an unexpectedly large 34% – helping Amazon shoot past overall profit predictions too.
• Amazon’s earnings forecast for this quarter was pretty much bang in line with investors’ expectations. After disappointing them with its last 2 quarterly reports, bucking that trend may have encouraged others to throw their hats into the Ring.

Why Should I Care?

For markets: Growth over value.

• Historically, Amazon’s been focused on growing its sales – while its cloud business has shifted investors’ focus to profit in recent years, Amazon’s own attention hasn’t wavered.
  • The company is still spending billions on building infrastructure for both its cloud and retail segments (including in delivery logistics)
• Amazon’s ambitions may bode well for its investors: “growth” stocks have risen far more than cheaper “value” stocks over the past decade.

For you personally: Share and share alike.

• Tech stocks like Amazon have long been a favorite among Finimizers, but at around $2,000 a pop, buying an entire share is a big commitment – and could turn a balanced investment portfolio into a risky one.
• Happily, some brokers now offer investors fractions of shares instead, allowing you to buy into Amazon with much less cash than you’d normally need. 

Content source: Finimize. (2020) Rumble In The Jungle. Available from: https://www.finimize.com/wp/news/rumble-in-the-jungle/ [Accessed 1 February, 2020]