Amazon: The Devil Is In The Details

Jeff Bezos/Amazon is the poster-child for the degree to which this entire economic and political system is profoundly corrupt. – Investment Research Dynamics
Amazon stock made a big after-hours ‘shock and awe’ move after it reported a huge headline ‘beat’ of its Q3 earnings. It’s a funny thing how the ‘beat the Street’ game works. Ninety days ago the consensus estimate for Q3 was $1.09, with one estimate as high as $1.59. The estimates were systematically ‘walked down’ over the last 3 months to a mean estimate of 2 cents and a high-end estimate of 26 cents. This is how the game is played.
Make no mistake, the Company knowingly ‘guides’ analysts down in order to engineer a ‘headline’ surprise. This is how absurd this game has become. The ‘beat the numbers’ game is one of the many frauds connected with corporate earnings reports. That said, AMZN’s EPS in Q3 2017 were the same as Q3 2016 – zero EPS growth. Bear in mind that GAAP acquisition accounting manipulation is heavily at play here. Acquisition accounting enables a company to boost revenues and hide expenses.
Here’s just a cursory look at the ‘Devil in the details’ (Short Seller Journal subscribers will get the in-depth, eye-opening analysis in the next issue released Sunday afternoon).
Amazon’s headline revenue ‘growth’ cost AMZN a lot money in terms of operating earnings. Despite the ‘marquee’ 34% sales ‘growth’ rate, AMZN’s operating income plunged nearly 40% year/year for Q3. This drop in operating income has accelerated, as YTD for the first 9 months of 2017, AMZN’s operating income has dropped 32%.

This post was published at Investment Research Dynamics on October 27, 2017.

 

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