The online e-commerce behemoth
reported lackluster Q4 results after the market closed yesterday.
The company missed our estimates on both the top and the bottom
line, dampening investor sentiment.
Earnings per share came in at 51 cents. Though earnings more than
doubled the prior-year level of 21 cents, it fell well short of the
Zacks Consensus Estimate of 71 cents. Revenues climbed 20% year
over year to $25.59 billion but missed the Zacks Consensus Estimate
of $26.05 billion.
The sluggish performance was mainly due to weak revenue growth in
the international market and higher holiday shipping costs.
Notably, international sales slowed to 13% in Q4 from 21% in the
year-ago quarter (read:
3 Best Performing Consumer ETFs This Holiday
The company expects revenues to grow 13%-24% to the range of
$18.2-$19.9 billion for the first quarter. The high end is above
our current estimate of $19.7 billion, suggesting optimism in the
AMZN growth story.
Amazon is planning to increase the annual price of its popular
service - Amazon Prime - by $20 to $40 to meet rising fuel and
other shipping cost. Currently, the service charges $79 per year
This hike would be the first in nine years and could boost the
company's profitability going forward. However, the risk of
moderating subscription renewals at a higher price could be a drag
on subscriber growth.
Based on the lower-than-expected numbers, AMZN shares tumbled as
much as 13% in after hour trading on Thursday. However, the shares
recovered sharply after the company revealed its plan to raise the
Amazon Prime price. The stock is down nearly 4.5% at the close of
after hour trading, while it was around the $370/share mark in
early Friday morning trading.
The roller-coaster ride puts some ETFs having higher allocation to
this Internet giant in focus for the coming days. Investors should
closely monitor the movement of these funds and take opportunity of
any recovery in the AMZN price (see:
all the Technology ETFs here
This is especially true given that AMZN currently has a Zacks Rank
#2 (Buy) and a solid
Zacks Industry Rank
in the top 39%. This adds to the bullish outlook and suggests good
Market Vectors Retail ETF (
This fund provides exposure to the 26 largest retail firms by
tracking the Market Vectors U.S. Listed Retail 25 Index. Of these,
AMZN takes the top spot at 8.86%.
The ETF has a certain tilt toward growth stocks, accounting for
more than half of the portfolio, while sector wise, specialty
retail has one-third of the share (read:
Beat the Cold Weather with These Hot Sector
The product has amassed $38.3 million in its asset base and charges
35 bps in annual fees. Volume is moderate as it exchanges nearly
52,000 shares per day. RTH is down over 5% in the year-to-date time
frame and has room for upside given the Zacks ETF Rank of 2 or
'Buy' rating with a 'Low' risk outlook.
PowerShares Nasdaq Internet Portfolio (
This fund follows the Nasdaq Internet Index, giving investors
exposure to the broad Internet industry. The fund holds about 80
stocks in its basket with AUM of $307.8 million while charging 60
bps in fees per year. It trades in moderate volumes of nearly
67,000 shares a day.
Amazon occupies the fourth position with a 7.68% allocation. In
terms of industrial exposure, Internet mobile application makes up
for more than two-thirds of the share in the basket, followed by
PNQI lost nearly 1% so far this year and currently has a Zacks ETF
Rank of 1 or 'Strong Buy' rating with a 'High' risk outlook (read:
3 ETFs to Buy on Great Facebook Earnings
First Trust Dow Jones Internet Index (
This is one of the most popular and liquid ETFs in the broad tech
space with AUM of nearly $2 billion and average daily volume of
more than 320,000 shares. The fund tracks the Dow Jones Internet
Composite Index and charges 57 bps in fees per year.
In total, the fund holds 41 stocks in its basket with Amazon taking
the second position with a 7.41% share. From a sector look,
Internet mobile applications accounts for more than half of the
portfolio while Internet retail and software & programing
receive double-digit exposure. The ETF is up about 1.3% year to
date and has a Zacks ETF Rank of 1 or 'Strong Buy' rating with a
'Medium' risk outlook.
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AMAZON.COM INC (AMZN): Free Stock Analysis
FT-DJ INTRNT IX (FDN): ETF Research Reports
PWRSH-ND INTRNT (PNQI): ETF Research Reports
MKT VEC-RETAIL (RTH): ETF Research Reports
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