Yesterday, Amazon(AMZN) reported a surprise loss of $7 million even though revenue grew 20% to $15.7 billion. This caused investors to worry about the future profitability of Amazon due to its low profit margin and growing operating costs. When the report was released after hours, the stock shed 3%. However, investors still remain optimistic about future growth prospects for the company, causing share to rise 3% by the closing bell.
Expedia(EXPE), the online travel giant, reported earnings that fell short of analyst estimates by $0.17 per share! Revenue rose 16% this quarter to $1.21 billion, which was over $50 million off the projected $1.26 billion. Earnings fell over 30% from the same quarter last year to a dismal $71.5 million. The company's earnings drop was largely due to rising expenses from its sales, marketing, and technology divisions. This indicates that the company's profit margin is shrinking rapidly, and may force management to take cost-cutting measures. Over eight analysts downgraded the company, prompting shares to drop nearly 30% and making it one of the largest movers on the Nasdaq. Expedia still maintains a healthy $800 million in cash, which might not last if the company continues to face growth in operating expenses.
Sources:
The Wall Street Journal
Yahoo! Finance
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