How To Lose More Than $3 Billion In A Single Day!

Jeff Bezos Upset

Have you ever heard of Jeff Bezos? Of course you have! He’s only the long-time CEO of one of the biggest tech corporations in the United States…Amazon. As I got more and more into binary options, Amazon become one of my favorite assets to watch. Interestingly enough, it’s one of those assets that has volatile tenancies while still remaining incredibly predictable. Well, if you’ve been watching Amazon, you’ve been watching a complete landslide. Today, we’ll talk about what’s going on as well as how you can capitalize on the data as a binary options trader!

What Happened With Amazon?

Last Thursday, Amazon released its Q2 earnings report; a report that was disappointing to say the least. Looking at it in the beginning, it actually seemed pretty good. Compared to this quarter last year, sales are up 23%. As we start to dig deeper, we see the same problem we see time and time again with Amazon; their core business model is built completely around razor thin profit margins.

Somehow, even after generating $19.34 billion in gross sales this quarter, Amazon was still able to lose an astonishing $126 million. So, where did it all go? Throughout the not so distant past, we’ve watched Amazon unleash some pretty cool products…

  • Amazon 3-D Fire Cell Phone - If you pay any attention to tech at all, you’ve heard of the Amazon 3-D Fire cell phone. This monumental release was Amazon’s debut into the cell phone manufacturing market.
  • Unlimited Book Subscription - Amazon’s been working on this one for quite some time. They’ve recently released an unlimited book subscription that works much like a digital library card. For $9.99 per month, consumers have access to tons of book titles.
  • Streaming Content - Amazon recently added streaming video to their Prime subscription. This gives consumers more of a reason to sign up. Although Amazon doesn’t release the exact number of Amazon Prime users, they have announced that the numbers are up.

Every one of these products has the potential to bring incredible profits in the long run. However, hefty investments to get them going helped to create an incredibly poor earnings report.

Another thing that helped to drive profits down to negative numbers was Amazon’s aggressive expansion of worldwide fulfillment centers. Aside from the costs associated with building these fulfillment centers, Amazon has now started to staff these centers. As everyone knows, employees cost money! However, with more fulfillment centers around the world, Amazon will be able to reach more customers than ever.

How The Stock Market Reacted To The Poor Report

As history tells us, when any overwhelmingly poor data comes out about any asset, investors react; essentially driving the value of that asset down. That’s exactly what happened in this case. As a matter of fact, in morning trading Friday Amazon was down more than 10%. Throughout the day, they saw incredibly slow, yet steady growth leading to an overall single-day loss of 9.6%.

And That My Friends Is How Jeff Bezos Lost More Than $3 Billion In Net Worth In A Single Day!

What We’re Seeing Today

As history tells us, Amazon is definitely a company that’s been down in the past. However, you can’t ever count Jeff Bezos’ abilities out. After all, looking at what he’s done with Amazon in the last 10 years, you’ll see nothing less than an astonishing performance. With that said, I made a prediction that we’ll see a slight growth in value by the end of the day today (We’ll talk about my mid and long term predictions below). Well, we’re in mid day trading now, and I’m getting a bit nervous. As I expected to see, we saw a steep drop in morning trading; down almost $8 per share by 10:25 this morning. However, we’re really starting to see the pace of the stock picking up. Currently (7/28/2014 2:00 PM) it’s down $3.44 after a dramatic recovery over the last hour.

How Binary Options Traders Can Capitalize On This Data

As I mentioned above, Amazon is an incredibly predictable asset. They’ve been down before, but it’s impossible to count out the talents displayed by Bezos. With that said, here are my short, mid, and long term predictions…

First off, I have no crystal ball, I use data to tell me what the future MIGHT be. This information is intended for entertainment purposes and is not intended to be used as advice. In other words, if you trade based on my predictions without doing your own intensive research or speaking with your financial advisor and lose your money…YOU CAN’T SUE ME!

Short Term (Tomorrow) - As I mentioned above, I still believe that we’ll see Amazon at least break even if not grow an incredibly small amount by the end of the day today. As far as tomorrow goes, I would expect that we’ll see much of the same. I don’t think the drop in the morning is going to be so drastic, however, I do expect to see one. At the end of the day, mid day trading should propel Amazon into a small gain.

Mid Term (This Quarter) - All in all, I think that Amazon is going to struggle quite a bit this quarter, but they’ll still show gains. The bottom line is, they’ve got tons of great things going for them on the long term level. Because most investors invest for the long haul, we can expect Amazon to post slow and steady gains throughout the quarter.

Long Term (Years To Come) - Although Amazon has been downgraded by at least 5 investment banks, I still think that in the long run, Amazon is a solid investment. In the past, their problem has been their incredibly thin profit margins. So, in order to combat that, they’ve started to come up with profitable products, like cell phones. Sure, they’re in a slump now, but just look at what Bezos has done in the past 10 years…I’d expect him to keep his record going strong in the long run!

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20 responses

  1. It is kind of hard to fathom losing $3 billion in a day. With smaller amounts invested the numbers aren’t that large when a stock declines, it is pretty amazing to think that someone can lose $3 billion and it will probably have no affect on how solid his personal finances are.
    Kipp recently posted…Life Is Short – You Only Live OnceMy Profile

    • I would never even want to think about losing that much! It is pretty cool to think this really won’t hurt Bezos on a personal level.

  2. It’s hard to find the best binary options broker out there. However, the ideal situation is to get a binary options broker that offers several financial assets spread across several markets, offers a reasonable bonus with a good payout approaching 80%, and offers flexible expiration dates without boxing traders into very long expirations.
    Alicia @ Monster Piggy Bank recently posted…Enjoying the new Carseldine Markets and Buying Local ProduceMy Profile

    • It definitely is hard to find the best broker out there. I know LBinary is pretty good because I use them personally. I’ve gotten my payouts, got a nice bonus, and everything seems to be going smoothly. Thanks for swinging by!

    • I definitely agree with you there. However, Nasdaq does predict their P/E ratio is going to go down over the years. Check this out… http://www.nasdaq.com/symbol/amzn/pe-ratio. As far as the R&D side goes, I wrote an article about investors getting worked up over that a while back on anyoption’s blog. Thanks for swinging by!

  3. Before the crash, l would have been all over this, along with my friends.. :-) . Now, it’s all about dividends and passive income. I rarely check out stock prices, now l only watch CNN for entertainment and also because it’s one of the few English channels we get. Now, l’m all like.. “drink up folks, l’m loving the dividends” :-) :-) :-)
    kemkem recently posted…Feast of St. Joseph, MaltaMy Profile

    • Dividend are great, I invest for them too, after all, who doesn’t want a nice dividend check here and there? I still love the fast paced thrill of binary options though, so I’m not quite sure I’ll ever give it up!

  4. It’s really hard for me to imagine losing over three billion in just one day only because a stock went down 10%. Even weirder is the fact that it probably won’t hurt Bezos at all in the short or long term.

    I also believe that Amazon is a solid investment in the long run. Once they sort their profit margins out and release more and more lucrative offerings they’ll be raking in the cash. They’ve already established themselves as a major brand with a large returning customer base, now it’s time to start generating profits off those loyal customers.
    No More Waffles recently posted…How I Keep Track of My Budget, Free TemplateMy Profile

  5. I did next to nothing educational on vacation, but I did read an article in USA today about how much Amazon had lost and they blamed lots of it on having to keep up with Amazon Prime’s free shipping. I actually think it was a really smart move to price it so cheaply early on, even if it was a loss leader. Now people feel like they need it and will be willing to pay more when they do make it lots more expensive or split up the benefits into tiers or however they decide to do it down the road.
    Kim recently posted…Pros and Cons About Booking a Vacation With PointsMy Profile

  6. It does seem crazy to lose that amount in a day, but everything Amazon does it kind of crazy. I personally love the company and I do own some AMZN, but they have their downside as well. The profit margin is an issue; however, I think they are still building their foundation with all of the new ideas they come out with. Once they have a hand in basically every market, I think they will begin to grow at a faster rate and I think their profit margins will increase gradually. Great article!
    Kalen @ MoneyMiniBlog recently posted…24 Things That Are More Likely to Happen Than Winning the LotteryMy Profile

  7. Amazon has a long-term outlook, as should investors. By investing in new technologies and services, Bezos has continued to impress me with positioning Amazon at the forefront of growth industries. Yes $3B is a staggering amount but does anyone really believe that one day’s results on Wall Street have much validity regarding the long-term outlook of Amazon?
    Paul @ The Frugal Toad recently posted…DK Eyewitness Travel Guide Italy Review & GiveawayMy Profile

  8. When the market dropped last Thursday and Friday, I lost a few thousand and it caught my attention. Then I think of losing $3 billion!! It just shows you that you have to keep thing in perspective when investing. Sure he lost $3 billion and that stinks, but Amazon isn’t going away anytime soon and he will make that (and more) back.
    Jon @ Money Smart Guides recently posted…Advantages Of Mutual FundsMy Profile

  9. Unlimited book subscription sounds awesome! This is really new to me, thanks for sharing this information :D
    I’m not familiar with binary options trading, but I agree with your predictions. I don’t think they will go back up in the short term, but seeing how Amazon’s business model still going strong, they will eventually be back to where they were (or even better!)
    Poor Student recently posted…Eating Healthy on a Student BudgetMy Profile

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