Amazon.com Inc. reported a profit loss growth price in the third quarter.
shares fell 2.1% on Friday after announcing results. According to Brian Olsavsky, the company's chief financial officer, Amazon exceeded the $ 800 million that the company spent in the second quarter to set up a one-day shipment and made an additional large investment in the third quarter. In addition, further costs arise.
"As we approach the fourth quarter, we added a fine of nearly $ 1.5 billion in shipping costs in the fourth quarter, which is essentially transportation costs and the cost of expanding our transportation capacity, things like adding extra rolls and shifts in our warehouses, "he said, according to a FactSet protocol.
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According to Olsavsky, it was worth every penny.
"But we are very happy with the customer response to one day," he said. "You can see it from our acceleration in sales as well as from our acceleration in unit growth."
This is also a valuable asset for Prime members.
"We saw Prime members increase their orders and spend more," Olsavsky said. "You also have to consider it a real help for your daily life."
Olsavsky said the company continues to invest in AWS.
Although the numbers are sensational, analysts are optimistic about investments. Charlie O & # 39; Shea, Moody's Amazon analyst, described the issue as "strategically necessary." In addition, the company has the money.
"We continue to believe that Amazon has solid cash and short-term liquidity in excess of $ 42 billion in long-term investment and AWS's consistent operating performance of $ 2.3 billion per quarter the company a considerable opportunity to continue its countless necessary investments. "
KeyBanc Capital Markets underscores the importance of Amazon benefiting from the one-day shipping expansion.
And: Walmart is not waiting for Halloween and will start Christmas offers on Friday. Analysts led by Edward Yruma wrote. "Investing in support of one-day and AWS products will contribute to sustainable long-term growth and we expect leverage in the medium term."
The one-day offer is also another distinguishing feature between Amazon and its main competitor Walmart Inc.
WMT, + 0.04%
"The ability to effectively offer the entire Prime range in one day differs from Walmart.com's more targeted selection," said KeyBanc.
KeyBanc rated Amazon shares overweight with a target price of $ 2,200. [OOS] Leary, Senior Analyst at Edge by Ascential, also notes how Amazon transforms retail.
"Amazon invests today in delivering an outstanding shopping experience through delivery speed driving the retail business forward massively (faster than every quarter in the last two years)," said O'Leary. "Apparently, the company is typically positioning itself at Amazon as a competitive leader, having to take some price drops today."
But Amazon is not just positioning itself as a leading retailer, Financial Group, according to Susquehanna.
"We are buyers in the crisis as we continue to favor Amazon," analysts led by Shyam Patil said. "[W] We see the company as a long-term, secular grower with leadership positions in three growth markets – e-commerce, cloud and advertising."
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Even the faltering Amazon Web Services or cloud business is not a big problem, as "it is still early and we expect AWS growth and margins to remain short and long term."
Susquehanna rates the Amazon Share positive and lowered its price target from $ 2,250 to $ 2,200.
Even benchmark analysts are not deterred by the stock market reaction.
remains on track, although, as is often the case with Amazon, we have significantly underestimated the amount of these pre-issues, "wrote Daniel Kournos, a benchmark analyst.
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"Once the majority of the one-day push is completed, Amazon will create a deeper competitive ditch that should yield returns in several additional years of market share gains. We would be buyers of weakness. "
Interest rate on the purchase of Amazon shares with a target price of $ 2,100.
Amazon shares gained 16% year-to-date, the Amplify Online Retail ETF
IBUY, + 1.52%
and the S & P 500 Index gained 25.7%
SPX, + 0.49%
rose 20.5% over the period.