Amazon Earnings, What's The Trade?
Amazon reports earnings Thursday and investors are eager to hear if the new Kindle might spark some life in the firm’s bottom line!
The device, which Oprah has called her new favorite gadget, began shipping in February and has the same $359 price tag as the old version but is skinnier and has a number of upgraded features like the ability to store many more books and to read text aloud from two small speakers on its back.
The company has not released sales figures for the Kindle, which it started selling in late 2007, but Citi Investment Research analyst Mark Mahaney had estimated that the company sold 500,000 Kindles in 2008.
Analysts polled by Thomson Reuters, on average, expect first-quarter income of 31 cents per share on $4.76 billion in revenue.
In January, Amazon predicted first-quarter revenue between $4.53 billion and $4.93 billion.
What's the trade?
Dan Niles, of Alpha One Capital Partners tells Fast Money not to buy ahead of earnings. “This is a stock that’s up 50% this year and trading at a 30 multiple. I think there are a lot better places to put your money than to chase this. I’d rather own eBay .”
And he adds “God help them if they don’t beat the numbers and have really good things to say on the call because that’s what everyone is expecting.”
"I would not be a buyer here either," echoes Karen Finerman.
"If they miss numbers and the stock pulls back I think you could hold your nose and jump in," counters Guy Adami. "But if they beat then you have to wait."
Meanwhile, Jefferies & Co. analyst Youssef Squali is more bullish. He expects results to be near the higher end of Amazon's outlook and in line with analysts' estimates. He forecast quarterly earnings of 33 cents per share, on revenue of $4.81 billion.
"Traffic data to the site points to continued strength in visitation, which attests to AMZN's popularity and bodes well for top-line growth," he says. However, the analyst also notes that aggressive promotions or discounting of items could hurt margins.
> Earnings Preview: Amazon.com to report 1Q results
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Trader disclosure: On Apr 22th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Seymour Owns (BAC), (EEM), (FXI), (TCK), (INTC), (FIC); Seymour Is Short (AAPL), (FCX), (POT); Finerman's Firm Owns (AXP), (RIG), (UNH), (TBT), (ELX); Finerman's Firm Owns (BAC) Preferred; Finerman's Firm Owns (C) Preferred; Finerman's Firm Owns(MSFT) & (MSFT) Put Spread; Finermans Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO); Najarian Owns (PALM); Najarian Owns (BX) Call Spread; Najarian Owns (MCD) & (MCD) Calls; Najarian Owns (MS) & (MS) Calls; Najarian Owns (RHT) Call Spread; Najarian Owns (RIO) Calls; Najarian Owns (VAR) Call Spread; Najarian Owns (XHB) Cal Spread; Najarian Owns (XLB) Call Spread; Najarian Owns (ANR)