Shares Value of Amazon Soared,reaching highs record

October 25, 2009

Low price, good customer service, and increasing consumer interest in shopping online for contributing to the financial performance of Amazon.com that solid in the third quarter yesterday. Not only, analysts even see this growth will continue despite the retail sector in general still be weakened.

Last Friday, Amazon’s stock value soared to record highs during the mass after an online retail company based in Seattle makes analysts and investors stunned when they reported that at last the third quarter, growth in their net income increased 68 percent – a clear signal that the consumer more frequent shopping through Amazon, although economic conditions are still bleak.

“I think people are going to start shopping again,” said Bernstein Research analyst Jeffrey Lindsay. “There is increasing demand in this sector, and successfully captured the largest portion of the Amazon.”

According to Lindsay, this growth was partly due to demographic customer base which he said Amazon had more money than the average U.S. consumer to buy goods rather than primary needs such as books and video games.

He added, Amazon has managed to gain the trust of buyers who believe that Amazon will always fix the problems they found when shopping online, whether they buy goods from Amazon or direct from the Amazon partner sellers.

Aaron Kessler, an analyst at Kaufman Bros.., Believes that Amazon also benefited from the customers who buy expensive goods during the third quarter. He noted that Amazon’s earnings grow faster than the number of items it sells.

Amazon does not specify how many items are sold in each quarter. They just released the percentage growth – 32 percent in the third quarter compared to the same period last year compared to 28 percent in the second quarter. In terms of revenue, Amazon recorded growth of 28 percent in the third quarter compared to the same period last year, so for $ 5.45 billion, compared to 14 percent growth the previous quarter.

Thursday last week, Amazon said that they achieve earnings of $ 199 million, or 45 cents per share, in the third quarter.

This achievement far exceeded Wall Street projections. And they were even warned that this momentum will continue: Amazon projected their revenues will grow from 21 to 36 percent in the fourth quarter.

The result, Amazon’s stock soared 25.04 points, or 26.8 percent, and closed trading at $ 118.49 level. Throughout the day only, Amazon’s stock had soared to a level of $ 119.65.

“I think you’ve seen a sign from the growing public belief that we have been pounding the economic base, because that person may begin to spend their money,” said Kessler. Then, Can Amazon to maintain this trend in the long time? Some analysts believe so.

Their competitors such as Wal-Mart Stores Inc. is preparing to improve the performance of their online store on the Web, to compete with Amazon’s online book market is very popular because the price is super cheap.

However, Lindsay was not sure if Wal-Mart will be able to threaten the dominance of the Amazon. Throughout the third quarter, sales achievement of e-shop players such as eBay Inc.. also jumped.


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