Posted on July 23, 2010 by Dennis Snow
I guess I'll never be known as the "Wizard of Wall Street," because for the life of me, I can't figure out how Wall Street works. I try, but I just can't get it.
Latest example: Amazon.com's stock price tumbled 13% yesterday because second quarter profit missed analysts' projections. If the news stopped there, I'd understand.
But the news didn't stop there. Amazon.com's earnings are UP 45% and revenue is UP 41% from a year ago. Keep in mind that the Dow is up "only" 13.8% and S&P 500 is up "only" 12% during the same period. But missing analyst projections apparently trumps what seems to be strong performance.
Amazon is investing in infrastructure because, according to chief financial officer Tom Szkutak, "growth has been so fast the company needs to add capacity." And the company expects third quarter sales to grow between 27-40% over the same period last year with earnings growth of 24%. I'm not sure anymore if that's good or bad.
I thought Amazon's numbers looked impressive. But apparently they're disappointing. As I say, I don't get it. Which clearly means you shouldn't come to me for investment advice.