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The Losses at Amazon

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After spending one day as the world’s richest man, Amazon CEO Jeff Bezos is watching shares drop in price considerably in pre-market trading today. Last night Amazon announced its profits for the most recent quarter were a mere $628 million on revenues of $38 billion. That’s a 1.7% margin.

Despite generating over $900 million in profits from its Web Services segment, Amazon’s international retail operations lost money, dragging profits down to $628 million for the quarter.

Shira Ovide writes at Bloomberg that despite the poorer than expected performance, Jeff Bezos is doing exactly what he has said he would. She writes:

Again, though, Amazon is exactly the company it promises to be. It plows almost every last cent of sales back into fueling Bezos’s outsized ambitions. He is taking over a huge supermarket chain, for goodness’ sake. That is the strongest signal investors can get that Amazon is in expansion mode and wading into some unusual places.

Either you believe Amazon deserves the benefit of the doubt — and I do — or you don’t. Yes, Amazon needs to give investors a better explanation for how it plans to win in physical grocery stores, online entertainment and other areas. And some investors are justifiably getting nervous about the stretching valuations of Amazon and other tech titans after big stock gains this year.

But Amazon is Amazon. It’s grabbing revenue and market share at the expense of all other priorities. Don’t pretend Bezos is going to wake up tomorrow and run his company to squeeze fat profits.

Read more here.

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.