Are Amazon's Earnings A Sign Of Future Struggles?

On Thursday, e-commerce giant

its fourth quarter earnings results to anxious investors who had been hoping to see great things from the firm. However, in the hours following the firm's earnings call, Amazon shares fell 13 percent as investors backed away. While Amazon's results showed that the retailer had posted its largest quarterly profit ever in the final quarter of 2015, the earnings results came in below analysts expectations, spooking many traders.

Amazon's sales increased to $33.75 billion in the fourth quarter of 2015, a sizable increase from last year's $29.3 billion. The firm also reported EPS of $1.00, up from just $0.51 per share a year earlier. Most impressively, Amazon's annual sales came in at $107 billion, the first time the firm was able to reach past the $100 billion mark since its inception. However, those figures came in well below what analysts had been predicting. Before the release, most were expecting to see $36 billion in sales and EPS of $1.56 per share.

With Amazon shares trading lower, some investors are wondering whether now could be the time to buy Amazon shares. While it is troubling that the firm far undershot analysts' expectations, the company's results were far from being dismal. For that reason, some say the immediate sell-off was unfounded. The company has a lot of potential profit drivers in its future as it is working to improve its on-demand TV service and shipping options. Not only that, but Amazon is still heavily investing in its own growth, so its operating costs are continuously rising. Many expect that as some of its investments begin to pay off, the company will be able to pull back on its spending and enjoy higher margins as well.