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What You Need to Know About Amazon

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What You Need to Know About Amazon

July 27 2015, 07.40am GMT


On Thursday, Amazon (AMZN , +9.8%) delivered a quarterly report showing unexpected net profit and beating analysts’ sales estimates which sent the stock skyrocketing by going up more than 18% in after-hours trading.

July hadn’t been a good month for Amazon starting with its Prime Day which had promised to be a sales bonanza bigger than Black Friday. Amazon proclaimed the event a success, but it left many disgruntled customers who complained about the discounts and product selection. The other bad news for Amazon in July was that former company executive Marc Lore launched his startup Jet.com which he said will beat Amazon on price with its Costco-like membership program.

The 19 cents a share second quarter profit announcement in contrast to the 27 cents per share loss in the same quarter a year ago and an increase in sales to $23.185 billion, shattered analysts’ expectations. This combination of good news led to a takeoff in the share price which ended 10% up on Friday to close at $529.42 after an intraday high of $580.57.

In addition, the market capitalization for Amazon increased by $22.1 billion to $246.5 billion. The growth in market cap resulted in the company overtaking Wal-Mart and becoming the 11th largest company in the S&P 500 index (SPX), while also marking the first time ever that the market cap of Amazon has exceeded that of Wal-Mart’s.

The record closing low for Amazon stocks was on 1 October 2001 during the period after the terrorist attack on the World Trade Center on 11 September 2001. The closing price on Friday showed an astounding increase of 37,824% from the record low of $5.51 in 2001. Another statistic with regard to the Amazon’s closing price on Friday is that it was 26,939% up on its first trading day on 15 May 1997 when it closed at $23.50 which was a gain of 31% on its IPO of $18 per share.

Amazon experienced its second largest one day gain ever of $47.24 on Friday. This performance was eclipsed only by the price surge on April 25, 2015 when the shares rose by 15% following a company forecast of stronger than expected growth in the cloud business, which prompted three analyst upgrades in one day. This was also the third consecutive gain of at least 9% for Amazon stocks after the release of the quarterly report.

With Amazon now on pace to record their best month since September 2010, the shares are showing a year-to-date increase of 70.59%.

MT4 Chart: Amazon

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