It has been a trying time for
Amazon.com (NASDAQ: AMZN) investors. The stock is down 35% on the year, and is down some 43% from its all-time highs. With rising interest rates to start the year, high-growth technology stocks sold off hard. And last week, poor retail earnings reports from Walmart and Target seemed to confirm investors' worst fears over inflation's effect on retail sales. Since these are the two businesses Amazon dominates, it sold off hard.But with the company repurchasing stock and a stock split on the horizon, is
now the time to buy when others are fearful?The hints of last week's retail destruction were actually forecast by Amazon back in its April first-quarter earnings report. Total sales growth decelerated to just 7%, down from 44% a year ago, despite accelerating cloud growth. Operating income actually declined from $8.7 billion a year ago to just $3.7 billion. When stripping out operating profit from Amazon Web Services (AWS), Amazon's North American and international retail operations actually tallied a combined $3.8 billion operating loss. Keep in mind that this includes things like advertising and Prime subscriptions, which may be high-margin, so the losses in its pure retail business were likely even worse.Continue reading
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