Amazon reported its third-quarter financial numbers today, delivering $17.09 billion in revenue at a loss of 9 cents per share. Revenues surpassed analyst expectations of $16.7 billion, though the per-share loss fell perfectly in line with Wall Street's predictions.
Amazon's stock has been surging over the last year, rising to an all-time high of $330 a share this week. What's truly amazing about this run is that Amazon has missed expectations in three of its last four quarters and lost money in two of them. Investors care about Amazon's incredible revenue growth, especially in high-margin areas like its Amazon Web Services; its third-party merchant program, 3P; and its advertising.
During the third quarter Amazon made some important moves. It debuted a new Kindle Fire HDX and raised the minimum purchase for free delivery from $25 to $35 dollars, the first time in 10 years it's raised that price. It's unclear if this was a response to higher shipping costs or an effort to drive more customers to sign up for Amazon Prime, a $79 package that gives customers free shipping on all their orders. Same-day delivery is becoming an increasingly competitive area, with eBay, Google, and a host of smaller startups starting to offer rapid-shipping options.
Amazon share price
Part of the reason Amazon gets so much credit from investors despite its lack of profits is that Jeff Bezos has been consistent in advocating this approach for decades now. In his shareholder letter earlier this year, Bezos proudly quoted Matthew Yglesias, who characterized Amazon as a "charitable organization being run by elements of the investment community for the benefit of consumers."
"Long-term thinking squares the circle."
In April's investor letter, Bezos offered his own spin on what's really happening here, writing that "long-term thinking squares the circle. Proactively delighting customers earns trust, which earns more business from those customers, even in new business arenas. Take a long-term view, and the interests of customers and shareholders align."