Talk about a tiny profit margin.
Amazon.com expects to earn a maximum of $10 million next quarter -- on $15 billion of revenue. That works out to a less than 0.10% profit margin.Â
In the video below, Fool contributor Demitrios Kalogeropoulos discusses what's been dragging down the e-tailer's profits. Demitrios argues that even Amazon's preferred metric, free cash flow, has been falling lately, as huge investments in the online streaming market, cloud services industry, and tablet devices overpower earnings growth. That spending could become a problem, he says, if Amazon begins to prioritize competition in these new markets over investments in its core retailing business.
Everyone knows Amazon is the king of the retail world right now, but at its sky-high valuation, most investors are worried it's the company's share price that will get knocked down instead of competitors'. The Motley Fool's premium report will tell you what's driving the company's growth, and fill you in on reasons to buy and reasons to sell Amazon. The report also has you covered with a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.
The article Amazon's Vanishingly Small Profits originally appeared on Fool.com.Fool contributor Demitrios Kalogeropoulos owns shares of Netflix. Erin Miller has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Google, and Netflix. The Motley Fool owns shares of Amazon.com, Google, Microsoft, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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