What Investors Are Saying About Amazon's Fire TV -- And Amazon

Apr 4 2014, 1:58pm CDT | by

What Investors Are Saying About Amazon's Fire TV -- And Amazon
Photo Credit: Forbes Apple

Making a big splashy announcement about a set-top box can get you lots of ink or maybe page views on the Internet.

But investors get to have their say, too, and the stock’s performance Wednesday, Thursday and, especially Friday, suggests they weren’t impressed that much by Amazon.com's new Fire TV set-top box.

The shares fell slightly on Wednesday after the $99 device was introduced in New York to pretty much positive reviews, at least in terms of the product’s features. The box lets you watch videos and play games.

On Thursday, the shares stumbled an additional $8.29, or 2.4% to $333.67. On Friday, the slump turned into more of a rout: The shares fell to as low as $315.61 before rallying back $321.74, down were down 3.7%.

The stock’s recent chart suggests strongly that a lot of investors are saying “Show me something that puts money in my pocket.”

The shares are down more than 19% this year alone and down more than 21% since reaching an intraday peak of $408.06 on Jan. 27.

The poor performance comes even as the Standard & Poor’s 500 Index is holding on to a 1.3% gain for the year. The Nasdaq Composite Index is off about 1%.

The slump has cut the value of CEO Jeff Bezos’ stake in the company from $35.8 billion to $27.8 billion. To put that loss in perspective, it’s 30 times the $250 million he spent buying the Washington Post.

Despite the slump into near-bear-market territory, Amazon shares are still selling at 538 times trailing 12-month earnings and 55 times projected 12-month earnings.

For the last few years, Amazon.com has been given a pass by investors, awed by the company’s fantastic revenue growth (an average 30.4% a year since 2004), and the enormous investments Amazon made in computerized warehousing infrastructure so that 24-hour delivery is the norm rather than the dream. The stock was up 44% in 2013 and 58% in 2013.

This year, skepticism has entered the Amazon story. Investors aren’t sure that Amazon’s strategy of plowing money into things where the payoff may take some time will always work and is worth paying up for.

The Fire TV is a case in point. While it has a built-in audience in the range of the 20-million or so subscribers to Amazon’s Amazon Prime service, it still comes to the market late. Yes, it streams in video from Hulu, Netflix and other services. But it also has to compete against Netflix, Apple Inc.’s Apple TV, Roku’s streaming service and Google’s Chromecast and other products.

And there’s the thorny problem of finding enough bandwidth on the Internet to be able to stream videos to users without interruption. Netflix, you will remember, can generate as much as 30% of all Internet in prime-time viewing hours all by itself.

So, making Fire TV a big contributor to profits will take time, and you’d be excused if you don’t see it as a huge revenue contributor.

To be sure, not all of Amazon’s sell-off is investor skepticism about the company specifically. Big-cap tech stocks have been hit this week and were selling off on Friday. Biotechnology stocks have been slapped around. The SPDR S&P Biotech exchange-traded fund was down nearly 5% Friday and 4% for the week. The ETF fell 7% in March.

Still, it may not be too much of a stretch to suggest that Amazon is starting to look like Apple, whose shares peaked at more than $700 in September 2012 and are now trading 24% below that level./>/>

Investors seem to want more from the company and aren’t sure what to expect. So, they seem prepared to walk away.

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Apple Declares to Launch the Apple Pay on October 20 for the New iPhone Users
Apple Declares to Launch the Apple Pay on October 20 for the New iPhone Users
The iPhone 6 and iPhone 6 Plus users will be enabled to enjoy the Apple Pay service on October 20
 
 
Apple Reveals the 27-Inch iMac with 5K Retina Display
Apple Reveals the 27-Inch iMac with 5K Retina Display
The 27-inch Retina iMac has been equipped with the 3.5 GHz Intel Core i5, AMD Radeon 290X GPU, 1TB Fusion Drive and 8GB RAM
 
 
Apple Reveals iPad Mini 3 and Refurbished First-Generation iPad Mini
Apple Reveals iPad Mini 3 and Refurbished First-Generation iPad Mini
iPad Mini 3 and revamped first generation iPad Mini start at $399 and $249 respectively
 
 
Apple Reveals the New iPad Air 2
Apple Reveals the New iPad Air 2
The iPad Air 2 has been equipped with the A8X processor, M8 chip, upgraded camera, and the Touch ID fingerprint scanner
 
 
 

Latest from the Network

Bush shoe-tossing painting hits record at Doha auction
Doha, Oct 15 (IANS/EFE) A controversial painting by Iranian artist Mahmud Obaidi, depicting an Iraqi journalist throwing shoe in 2008 at then US president George W. Bush, was sold for $62,500 at a Sotheby's auction in...
Read more on Celebrity Balla
 
US offers $45 mn bounty for eight terror leaders
Washington, Oct 15 (IANS) The US said Tuesday it is offering rewards totalling up to 45 million dollars for information on eight key leaders of the Al Qaeda in the Arabian Peninsula (AQAP) terrorist organisation. The...
Read more on Politics Balla
 
UNSC extends peacekeeping mission's term in Abyei
United Nations, Oct 15 (IANS) The UN Security Council (UNSC) has renewed the mandate of the UN peacekeeping mission in the Abyei border region between Sudan and South Sudan. In an unanimously adopted resolution, the...
Read more on Politics Balla
 
Ebola cases in West Africa could reach 10,000 per week: WHO
Geneva, Oct 15 (IANS) The World Health Organisation (WHO) has warned that the Ebola epidemic in West Africa could reach 5,000 to 10,000 cases per week by the first week of December. "Quite frankly, ladies and...
Read more on Business Balla
 
Turkey, Singapore sign strategic partnership agreement
Ankara, Oct 15 (IANS) Turkey and Singapore have signed a strategic partnership agreement to boost economic, political and cultural cooperation, as well as security collaboration, during the official visit of...
Read more on Politics Balla
 
Christina Aguilera is returning to 'The Voice' USA
Christina Aguilera will return to 'The Voice' USA next year. The 'Your Body' hitmaker, who previously shared a rotating spot on the judging panel with Shakira, has been replaced by Gwen Stefani this season as she is...
Read more on Celebrity Balla
 
Kesha's music producer hits back
Kesha is being countersued by her record company boss, Dr. Luke. The 41-year-old music producer, who runs Kemosabe Records, claims the 27-year-old 'Tik Tok' singer is a liar and is trying to extort him after she accused...
Read more on Celebrity Balla
 
Jason Derulo won't get back together with Jordin Sparks
Jason Derulo insists his split from Jordin Sparks is permanent. The 'Talk Dirty' hitmaker, who recently ended his relationship with the 'No Air' singer after three years of dating, has ruled out getting back together...
Read more on Celebrity Balla
 
Josh Groban feels 'very lucky' to be dating Kat Dennings
Josh Groban feels ''very lucky'' to be dating Kat Dennings. The 'Brave' hitmaker was very nervous before singing in front of the '2 Broke Girls' actress for the first time at the Carousel of Hope Ball in Beverly Hills,...
Read more on Celebrity Balla
 
Australian Richard Flanagan wins 2014 Man Booker prize
London, Oct 15 (IANS) The first Man Booker prize to allow American nominees was Tuesday night won by an Australian, with Richard Flanagan triumphing for a novel of love and war that tells the harrowing stories of...
Read more on Celebrity Balla