The revenue beat should not work like this: on Thursday, Amazon (Nasdaq stock code: AMZN) The company reported earnings per share of $12.37 (Wall Street had previously forecasted only $7.41), and its sales of $96.1 billion were shocking and exceeded expectations of $92.7 billion. The e-commerce giant subsequently defeated a prediction with huge profits, that in the fourth quarter of the spending holiday season, its sales would grow to more than $112 billion, and possibly as high as $121 billion.
Wall Street believes that Amazon’s sales in the fourth quarter will be only $112.3 billion.
But despite this, investors still dumped Amazon stock. As of 1
Compared with the same period last year, sales in the third quarter increased by 37%, operating income increased by 96%, and diluted net income per share increased by 192%. The only thing that could be “bad news” this quarter is the fact that free cash flow fell from $3.2 billion a year ago to $901 million, due to Amazon investing a lot of money to deal with the influx of consumers locked in during the pandemic new business.
Even in the field of free cash flow (FCF), Amazon’s performance over the past 12 months also shows that FCF is $29.5 billion, an increase of 26% from $23.5 billion a year ago.
How to do
So, is it right or wrong for investors to dump Amazon stock today?
The stock’s pricing is perfect and it has entered the third quarter earnings. It performed well and was sold no matter what, but still traded at 51.4 times the FCF. Even if management predicts sales growth this quarter will be as high as 38%, and even if everything else in the company is normal, I have to conclude that Amazon stock is not a bargain.
If I were a shareholder today, I think I would also earn 80% of the income in the past year and sell my Amazon stock.