Amazon Surges After Q3 Earnings Report

Shares of Amazon rose 12% in overnight trade and reached an all-time high of $1,105.58.

The E-commerce giant reported earnings per share of 52 cents compared to the street’s estimate of 3 cents per share.

The company pointed to the 42% year-on-year increase in its web services and a boost in sales from Whole Foods as key drivers for growth in the quarter.

Interestingly, with the share price over $1,100.00, the “Price to Earnings” ratio is now 246.25 to 1.


Big Reversal In The FANG Stocks

Shares of Facebook, Amazon, Netflix and Google (also known as the FANG stocks) all fell over 3% today as investors pulled money out of the overheated US Tech sector.

The FANG stocks have been market leaders all year and have accounted for over 40% of the NASDAQ gains year-to-date. On a valuation basis, these names have added over $600 billion to the S&P 500 even though they only make up 13% of the index.

Many analysts have been expecting a pullback in the tech sector as P/E ratios and forward guidance data have approached the levels last seen prior to the 2000 and 2008 market corrections.

It’s worth noting as a point of reference that Microsoft, which is not a FANG stock, fell 62% after the 2000 tech bubble burst and dropped 45.5% during the financial crisis in 2008.

Even after today’s sharp decline, the S&P tech sector is still up over 18% for the year.

Amazon Shares Lower On Weaker Guidance

Shares of Amazon are down over 4% to $805.40, in after-hours trade, as negative Q1 revenue guidance overshadowed a solid Q4 earnings report.

Q4 earnings were announced at $1.54 per share versus a consensus of $1.35 per share. Q4 revenues came in at $3.5 billion versus $3.6 billion, which reflects a 47% increase on a year-on-year basis.

The Q4 revenue miss disappointed shareholders, but the Q1 guidance miss is what is really driving the stock price lower.

The company gave Q1 guidance in the range of $33.25 to $35 billion, lower than the expected range of $34.52 billion to $36.95 billion.

Key chart support for Amazon is now seen at or near $700.00.

Chart – Amazon