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Amazon Investors Shouldn't Fret

Revenue guidance was disappointing, but we still see the firm as a disruptive force that can grow profitably over time.


R.J. Hottovy: Amazon's third-quarter update was something of a mixed bag. On the positive side, the company posted 6.6% operating margins, which is the highest quarterly margins the company's seen in over a decade. In our mind this shows that a lot of the initiatives and the building blocks behind our longer term margin assumptions, things like AWS and advertising and Prime membership engagement and third party sales, are all clicking.

However on the negative side, the company's fourth-quarter guidance, particularly on the revenue side calling for 10% to 20% growth was a bit of a disappointment. Some of this is structural and accounting related, but it does call in to question about how competitive the field is getting in to. 

R.J. Hottovy does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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