Next up on the earnings docket is Amazon. To be more precise, next up on the lack of earnings is Amazon.
Historically the company reports figures that make it seem barely profitable. Yet investors still have paid a premium for it as seen in the past year’s stock performance.
Amazon is in the rare position where it can care less about all of the acronyms like EPS, PEG, etc… that Wall Street analysts like to judge companies by. The genius of Amazon is not in producing cyclical windfalls of profits to entice investors. The genius is in its execution of its business model. Amazon often always ranks at the top of any customer satisfaction survey. It is extremely rare that you hear of anyone with a negative opinion of the company. What is remarkable is that Amazon has been able to keep the high quality of customer engagement while adding more and more services and products. Amazon has successfully grown its web services, content streaming, and expanded its ultra fast delivery services. While not focused on the quarterly noise of earnings, Amazon has focused on deliberate and well executed steps to have an extremely pervasive presence and have a tight grip on consumers.
If AMZN closes today at $335.00:
On average expect it to close between $384 and $289.70 by the end of the week. If it goes according to the average, expect a $21.70 move in either direction by the end of the week. Out of the past 14 times it has gone up in price 9 times. If the largest change (up or down) over the past 14 earnings reports is repeated, expect a move more to the tune of $49.00 in either direction. Also of note is that the SPY, S&P 500 ETF, has followed Amazon’s direction for the week of the earnings report 10 out of the past 14 times.
Amazon can report any number it wants. The market looks more at its execution than anything else. If you trade the earnings keep that in mind. Your trade may work for only a short time around earnings. After that another dynamic takes over. Make sure you know when you are ready to take your profits.
Good luck and trade rationally.