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  • stkpkr44 stkpkr44 Dec 26, 2012 12:06 PM Flag

    Reasons for the drop and why it will drop further

    1. Retail sales numbers released today were dismal. Up 0.7% versus the expected figure of 2.5 to 3%. Amazon being the largest online retailer will be hit hard and their next quarter's revenue figures will probably miss. Since Amazon has little earnings to speak of, revenue is the only benchmark they can be measured against.
    2. Netflix debacle. Netflix uses Amazon's AWS infrastructure to stream movies and there was an outage for the past two days that prevented Netflix customers from streaming movies during the family gatherings on Christmas. Notably, Amazon has its own video streaming service which was not affected.
    3. Fiscal cliff jitters are prompting Amazon shareholders to sell after a more than 50% increase in 2012.
    4. Kindle sales disappoint and Amazon is discounting its Kindle product very aggressively, possibly losing money on each sale in the hopes of selling digital content to the customers in future. If customers hold on their purse strings, this strategy may not play out as planned.

    Sentiment: Strong Sell

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