Analyst: Amazon Has Answered Concerns Over Profitability This Quarter

Amazon.com, Inc. AMZN came out with spectacular results on Thursday after the closing bell, which has sent its stock soaring. James Cakmak, Equity Analyst at Monness, Crespi, Hardt & Co., was on CNBC to discuss Amazon’s fourth-quarter earnings and explain why his firm is still neutral on the stock.

Profitability Adressed

“The big thing that investors were looking for that we have been waiting for some time is the margin,” Cakmak said. “We have seen the revenues, it has come slightly slower over the course of the year, but the question is – is this a company that’s able to be profitable? and I think they proved that in the fourth-quarter.

He continued, “The quarter in itself exceeded expectations. The first quarter outlook more in-line to slightly lower, but at the end of the day the question is -is this a sustainable model for them in terms of profitability as we go forward?”

Did Jeff Bezos Had A Change Of Heart Over Profitability?

“Yeah, I really don’t think it’s a change of heart. I think, he is still sticking to his 97’ letter to investor that[…] of investing for the future,” Cakmak said. “So, I don’t really see a change in that, but I think that what we are seeing is the company is capable of producing profit as they deliver on the top-line.”

“We saw the North American margin hit 5.4p break-even internationally, but as they scale they should be able to get there, but when we take a look at it the question is – how quickly will these investments be able to […] to the top-line? Which is one of the reason we are neutral on the stock at this time.”