Amazon (Nasdaq: AMZN) is the world’s most profitable online technology company, with a market capitalization of $273.56 billion at a share price of $583.16. However if you, like me, have been watching the stock price recently your pulse will be racing as the losses pile up. Just recently, Amazon released its Q4, 2015 earnings results and the figures missed the mark in a big way. Clearly, December retail sales were not quite what the world’s premier online retail giant expected them to be, and it is showing in the final quarter’s results. The earnings per share (EPS) came in at $1, versus the expected earnings per share (EPS) of $1.56. This is a major discrepancy for Amazon shareholders who were expecting so much more from this company. Since the actual earnings results were so much less than analysts’ predictions, Amazon stock plunged by 15% after the report was published and in after-hours trading.

How strong is Amazon’s earnings capacity?

Despite apparent weakness by having missed corporate earnings estimates, the company is surprisingly strong. It has posted strong profits in 3 successive quarters, and there have been solid gains in many business units of Amazon including its Amazon Prime Business service and its Amazon Web Services.

In 2015, no other company was able to compete with Amazon as the top performing entity in the S&P 500 Index (SPY). This year however, the stock has moved to the downside – as have many other technology and industrial stocks on major averages – and declines of 5% have been reported. The good news is that Amazon’s share price has doubled in the previous 12 months.

Does this mean that Amazon is a strong buy, a moderate by, a whole or a sell?

As an investor, the long-term earnings potential for Amazon is clearly bullish. As a binary option trader, you needn’t worry about appreciation of your investment over time – you simply trade on market news, corporate earnings, sentiment and speculation. Based on the fact that Amazon missed its quarterly earnings consensus estimate figure, it is a clear put option for binary options traders in the short term (1 minute trades or 1 hour trades). You may be wondering what aspects of the company are performing below expectations? Let’s take a look at some figures to gain perspective:

• Sales from Amazon Web Services spiked 69% from 2014 to $2.41 billion
• A figure of $687 million was reported for Web Services operating income (+28.5%)
• US/Canada net revenue figures increased to $21.5 billion (+24% from 2014)
• Revenues from international markets increased to $11.84 billion (+12%)

So where is the weakness if there is so much strength with Amazon? Remember that no multinational corporation can exist in isolation today. We’ll all part and parcel of a global marketplace where the inextricably intertwined connections between currencies of developed markets and emerging markets are constantly interacting. Simply put, Amazon has lost a substantial portion of its revenues in USD terms as a result of weakness in emerging markets and strength of the USD. An estimated $1.2 billion has been lost as a result of forex rates. However, despite foreign currency weakness, various analysts are going long on Amazon stock and regard it as a buy rating with a price of $700 per share. That is the investment perspective over the long-term and this is an important distinction between binary options trading and investing.

Amazon metrics

This mega online retailer is based in the US and operates internationally on a large-scale. The last time that this stock was reviewed by a panel of analysts, it was given a low rating as a hold. The mix of factors determining the rating of Amazon stock includes bullish and bearish aspects – both of which need to seriously be considered in anticipation of trading for investment decisions. Some of the strong points of the company include:

• Substantial Growth In Net Income
• Strong Revenue Growth
• A strong overall financial position without significant debt concerns

However, on the flipside Amazon stock has a shoddy return on equity. The year-to-date performance has been rather lacklustre at -6%, and the 3-month performance has generated returns of 2.96%. Over the past 1 year, Amazon investors have enjoyed a 109.06% return, and over the past 3 years, investors have enjoyed returns of 130.17%. Earnings per share (EPS) performance is hardly where investors want it to be at -0.52 for the past year, 0.60 for the past 2 years and -0.09 for the past 3 years. Recall that on 4 January 2016 the downgrade by Monness Crespi & Hardt from a buy to neutral resulted in Amazon shares plunging 5.28%. This is largely due to the state of the global economy and the pressures that have come to bear on retail giants like Amazon.

Analyst opinion:

• The stock’s high price target is $900 and the stock’s low price target is $490
• On a rating scale of 1.0 (strong buy) to 5.0 (strong sell), Amazon is rated at 1.9
• On January 15, 2016 Susquehanna upgraded the stock to a positive rating and this has helped the stock to rally.
• In fact, since the 24 April 2015 there have been 10 upgrade/downgrades of the stock, with 8 of them being upgrades (bullish) and 2 of them being neutral positions.

If current conditions prevail binary options traders should consider put options in the short-term.