) is set to release its Q1 earnings this afternoon. The e-commerce
giant is expected to show a slight dip in profits, with with
earnings of $0.10 per share. This expectation has dropped from
around $0.33 in the past three months, though it still represents a
year-over-year increase in revenue of 22.6%.
Amazon has made a string of big announcements in the past several
months. It has increased fees over the past year for third-party
sellers using its service, but also appears to have a powerful
enough hold on the market to ward off retaliatory price cuts for
similar services from
). The fee hikes will continue to improve the company's margins,
which in 2012 increased from 2.7 to 3.2%. Further attempts to
expand margins may be in the works, though Amazon will have to
exercise caution as businesses have begun to express their
frustration with the fee hikes.
There are also whisperings of a set-top box, to be released later
this year, that would stream video from Amazon's ever-expanding
online video catalogue. This falls in line with prior revelations
of projects as diverse as a mobile phone, and potentially more
tablets to accompany and expand upon its current Kindle project.
CEO Jeff Bezos currently seems far more concerned with growth than
profits, and has credibly signaled his intent up to this point.
Analysts remain overwhelmingly bullish on the stock; whether or not
this attitude is maintained will depend on Amazon's ability to
follow through effectively on these signals.
I think AMZN will rally higher, and it has a measured move target
to $255 and $295 based on the ATM Straddle.
Buying the AMZN May 280-290 Bull Call Spread for $3.40
$340 per 1 lot
$660 per 1 lot
Greeks of this Trade