The online e-commerce behemoth
reported robust Q3 results after the market closed yesterday. The
company showed massive improvements on both the top and the bottom
line, reversing the trend of average negative surprises of 71.27%
over the past four quarters.
Still, the net loss per share came in at 6 cents. Though this was
in line with the Zacks Consensus Estimate, it narrowed
significantly from 60 cents loss per share in the year-ago quarter.
Revenues jumped 26% year over year to $17.09 billion and strongly
outpaced the Zacks Consensus Estimate of $16.78 billion. Most of
the sales growth came from the domestic market (up 31%) while the
international market (up 15%) also contributed to the upside (read:
3 Internet ETFs Leading the Tech World Higher
The cheerful revenue performance by AMZN indicates that the
momentum will likely continue into the crucial holiday season,
which is expected to be hampered by the recent 16-day U.S. shutdown
according to most industry experts. Further, it spread optimism in
the market and raised investor confidence in the long-term growth
The company expects revenues in the range of $23.5-$26.5 billion
for the fourth quarter, up 10-25% year over year. The high end is
above our current estimate of $26.05 billion.
Further, Amazon is turning out to be a broad technology company
with tablets and cloud computing services instead of just
being an online retailer. This has resulted in increased
spending which has taken a toll on AMZN's earnings. However, the
move would bear fruit once spending narrows and margins expand.
While AMZN has a Zacks Rank #5 (Strong Sell) for the short term,
the stock has an Outperform recommendation for the long term. This
indicates a bullish outlook for the company's growth given various
expansion plans and thus room for upside in the years ahead (read:
Buy This Top Ranked Tech ETF Now
Driven by the revenue beat, AMZN shares soared 8.26% in after hour
trading, after rising 1.67% in regular hours yesterday, on heavy
volume. This impressive run could be reflected in the ETF world as
well with funds that have heavy allocations to the world's largest
Below, we have highlighted two ETFs that look to be big movers in
the coming days, given the solid performance by Amazon. Investors
should closely monitor the movement in these funds and could catch
the opportunity from any surge in the price from here, especially
if it trickles into other internet names (see:
all the Technology ETFs here
First Trust Dow Jones Internet Index (
This is one of the popular and liquid ETFs in the broad tech space
with AUM of about $1.8 billion and average daily volume of nearly
250,000 shares. The fund tracks the Dow Jones Internet Composite
Index and charges 57 bps in fees per year.
While the top 10 firms dominate the fund's return with 56% of FDN,
Amazon is the second firm making up for 7.92% share. The Internet
and mobile segment accounts for more than half the portfolio,
followed closely by Internet retail at 23% of assets. The rest of
the portfolio provides a nice mix in a variety of related
industries including software and communications.
The product gained nearly 41% year-to-date and has a Zacks ETF Rank
of 1 or 'Strong Buy' rating with a 'Medium' risk outlook (read:
The Incredible Run for NFLX Puts These ETFs in
PowerShares Nasdaq Internet Portfolio (
This fund follows the Nasdaq Internet Index, giving investors
exposure to the broad Internet industry. The fund holds over 80
stocks in its basket with AUM of $204.6 million while charging 60
bps in fees per year. This product sees light volume of under
39,000 shares a day.
The ETF is heavily concentrated in the top 10 holdings with AMZN
taking the third spot at nearly 8.30%. In terms of industry
exposure, Internet & mobile application make up for two-thirds
share in the basket, followed by Internet retail and software &
PNQI added nearly 53% so far this year and currently has a Zacks
ETF Rank of 1 or 'Strong Buy' rating with a 'High' 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
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