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!