The government actually did it. It shut down. Leaving Americans to ask the question: What do we do now?
My suggestion is that, instead of panicking, we take a webpage out of Amazon.com Inc.‘s (Nasdaq: AMZN) playbook and go about life as usual, setting goals and accomplishing them with the same dedication we always have.
The world’s largest online retailer seems completely unfazed by the government shutdown, the official introduction of Obamacare, or any national predictions for the rest of the year or 2014. Far from it: It says it’s hiring 70,000 full-time seasonal U.S. workers to handle the holiday season.
That’s 20,000 more seasonal employees than it hired last year, and Amazon says it expects to keep at least a few thousand of them on for the long haul.
Taken by itself, that’s quite the bullish move on the company’s part, especially at a time when the economy still hasn’t fully recovered. But after looking at what Amazon has been up to over the past couple years, it’s difficult to think of it as anything but strong… with a stronger future ahead of it.
Turnaround After a Surprise Loss
In 2010, Amazon made total revenue of $34.2 billion and gross profit of $7.64 billion.
In 2011, it saw those numbers rise to $48.07 billion and practically $10.79 billion respectively.
And in 2012, total revenue was $61.09 billion and gross profit rose to $15.12 billion. So the company has clearly been successful in its expansion efforts over the past three years.
As for 2013, Amazon is well in line to net further gains, since it’s already brought in $8.7 billion in profits for the first half of the year… well before its most profitable quarter – October through December – is factored in.
That’s not to say that expansion doesn’t cost something. As evidenced by the numbers above, its financial intake has been increasing steadily… But so has the cost of earning it.
That push for more actually led Amazon to report a surprise loss of $7 million during its last quarterly statement, and the stock sold off as a result. And while it initially recovered those losses and then some, it went on to waver its way downward through August until finally turning around last month.
It’s since hit an all-time high of over $317, adding over $4 in early trading on October 1 alone.
And chances are, it will hit somewhere significantly higher before the year is out.
The Future Is Amazon’s
Amazon CEO Jeff Bezos knows exactly where he wants to steer the company, and that’s in the direction everything else is going these days: toward digital products.
Books, video services and other sources of entertainment or information are increasingly moving out of their traditional boxes and onto computers or computer substitutions… like Amazon’s Kindle.
Just last week, the online retailer introduced the Kindle Fire HDX, the latest installment of its e-reader. This newest version adds better clarity and color as well as faster speeds and less heft.
It’s that kind of focus that ultimately led Amazon to its quarterly tumble, but it’s also that kind of focus that will send its stock soaring going forward.
Though it’s trailing Netflix (Nasdaq: NFLX) badly when it comes to subscription-based video streams (2% versus 89%), and Apple (Nasdaq: AAPL) has it soundly beaten in the e-reader department (48% versus 17%), that just shows how much ground it can gain…
And how much profit it can make.
If anybody can improve those margins against such formidable competitors, it’s Amazon.
Remember: Neither Apple nor Netflix are invulnerable. Google (Nasdaq: GOOG) and its Android smartphone operating system have more than proven that the once almighty iPhone can lose market share. So against the right tools and advertising skills, the iPad can lose its place of dominance as well.
As for Netflix, well, it can easily be its own worst enemy as we’ve seen in the past.
Amazon is more than tough and savvy enough to improve its digital-world standing from here. Expect its stock to reap the rewards.
View original at: Investment U
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