Analysts are taking a look at Amazon's investment strategy as the online retailer's stock falls in premarket trading Friday following lackluster second-quarter results.
Late Thursday, Amazon.com Inc. reported a bigger-than-anticipated loss for the quarter, while its revenue topped analysts' estimates.
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Chad Bartley of Pacific Crest Securities said in a client note that larger-than-expected investments by the Seattle-based company could weigh on the stock during the second half of the year. The analyst anticipates Amazon will likely aggressively enter new markets over the long term, which could include categories such as groceries.
While Bartley said that Amazon probably lacks near-term positive catalysts, he is upbeat on its long-term outlook.
The analyst reaffirmed an "Outperform" rating and $460 price target.
Jefferies' Brian Pitz said Amazon's investment push is still mostly driven by strong growth rather than competitive pressures, which is further delaying profitability.
The analyst cut Amazon's price target to $435 from $450 but kept a "Buy" rating.
Shawn Milne of Janney Capital Markets said that investments in large markets such as cloud computing "will set Amazon up for stronger profit growth against significant near-term investments."
Milne reduced Amazon's price target to $400 from $425 and maintained a "Buy" rating.
Shares of Amazon dropped $36.36, or 10.1 percent, to $322.25 in premarket trading about two hours before the market open.