Amazon.com Inc.’s share price up, posts fourth-quarter sales and profit projection that misses initial analysts’ forecasts

Amazon.com Inc. announced its projection regarding sales and profit for the fourth fiscal quarter, which came below initial analysts estimates. The companys forecast also highlighted the limits of its Chief Executive Officer Jeff Bezos strategy to make large investments in order to boost Amazons growth.

The Chief Financial Officer of Amazon, Tom Szkutak, commented in a conference call with reporters, cited by the Wall Street Journal: “We do have a lot of opportunities in front of us. We certainly have been in several years now of what I will call an investment mode, but we know that we have to be very selective about which opportunities we pursue.”

Amazon said that it expects its revenue over the holiday quarter to be in the range of $27.3 billion to $30.3 billion. The U.S.-based company also revealed that its profit excluding some items is forecast to vary from a loss of $570 million to a gain of $430 million. This outlook fell short of analysts expectations of sales amounting to $30.9 billion and profit of $460.5 million.

The company has also been recently put under pressure by analysts and investors, who have been accustomed with quarters of record sales. Its Chief Executive Officer is trying to restore growth by spending on “technology and content” that includes new products, licensing for videos and music content and data centres.

As reported by the Wall Street Journal, Michael Pachter, an analyst at Wedbush Securities, commented on the companys strategy focused on more investments in order to expand growth: “Clearly, they’ve been spending money everywhere. They’ve been releasing these new products—the phone, the set-top box, streaming originals—but it’s not clear how that leads to sales.”

Amazon.com Inc. was 0.07% up to close at $313.18 per share yesterday, marking a one-year decrease of 4.15%. The company is valued at $144.60 billion. According to CNN Money, the 36 analysts offering 12-month price forecasts for Amazon.com Inc. have a median target of $392.50, with a high estimate of $460.00 and a low estimate of $325.00. The median estimate represents a +25.33% increase from the last price of $313.18.