Full 360-Degree Earnings Preview for Amazon (Update)

Amazon.com Inc. (NASDAQ: AMZN) is set to report its third-quarter earnings Thursday after the market closes. Thomson Reuters has consensus estimates of -$0.74 in earnings per share and $20.84 billion in revenue. The third quarter from the previous year saw earnings of $0.09 per share and $17.09 billion in revenue. Looking ahead to the fourth quarter, the consensus estimates are $0.67 in earnings per share and revenue of $30.89 billion.

UPDATE: Amazon’s earnings are out, well losses at least. Our view: Jeff Bezos thinks he is running a charity!

Amazon’s chart looks on the surface to have a serious overhang. The 50-day moving average has acted as strong resistance for Amazon since it crossed under in mid-August, and the average is at $325.90. The 200-day moving average has acted as an overhang since it was tested in early September. It currently reads at $335.98. That puts resistance at close to $10 higher on the first stop and $20 higher on the second stop.

Options traders appear to be braced for a move of $12 to $13 in either direction. The trading volume is not indicative of any major bias one way or the other for an upward or downward prediction tool. That being said, this expectation is only a move of about 4% — and that is for a company that is expected to post a slight loss in 2014 and is still valued at about 160 times expected 2015 earnings.

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The big issue is how to value Amazon. It just keeps growing in size and dominance. Revenues were almost $74.5 billion in 2013 and are expected to be $90.7 billion in 2014 and $109 billion in 2015. Much of this is done at a loss, so it makes for a valuation conundrum. Amazon also has so many moving parts, with content, Kindle readers, smartphones, the cloud and anything that can be sold retail online. It just makes it very hard to know what to expect — other than Jeff Bezos promising to invest heavily for the future at the expense of profits today.

So, what do analysts think? Shares are trading around $315.50 and have a consensus analyst price target of $390.69. The 52-week range is $284.38 to $408.06.

A fresh report from Cowen indicates that Amazon continues to dominate Internet e-commerce, as third-party sellers on its platform were up 45% year-over-year in August, which was listed as being the seventh month this year with sequential increases. In addition to incredible sales growth, the company’s Web Services division is considered the top player in the public cloud business. Amazon’s AWS division delivers a set of services that together form a reliable, scalable and inexpensive computing platform and the company recently announced its CloudTrail security system to work with all third-party reporting dashboards and alert systems. This helps to keep all stored data safe and secure.

Bank of America reiterated its Buy rating for Amazon, but lowered its price target to $390 from $400, on October 13.

Shares of Amazon were up 0.8% around $315.50 after the first 90 minutes of trading Thursday, and the online retail giant has a market cap of $145 billion.

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