When is a 36 percent quarterly revenue increase and a 7.1 profit jump that beats analysts’ predictions justification for a big fall in a company’s stock price/ When the company is Seattle’s Amazon.com.
The company, the world’s largest Internet retailer, reported those favorable results after the closing bell Thursday, but investors punished the company by selling enough shares to cause a $16-plus decline in the company’s stock price in after-hours trading.
The decline was clearly a result of investors’ own inflated expectations of what Amazon would report for fourth quarter earnings Thursday afternoon. Investors had run up Amazon’s stock price during the day to $184.45, up $9.06 for the day.
After the actual results fell short of those private expectations, investors rushed for the door.
Amazon’s revenue performance was within its own predictions and its profits beat Wall Street consensus expectations by 6 cents a share.
The result well illustrates how much investors operate based on their own sometimes giddy expectations even when the company and analysts are in disagreement.