Shipping Costs Swell for Amazon.com, Inc. (AMZN) — Should Investors Be Concerned?

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While Amazon.com, Inc. (NASDAQ:AMZN) continues their explosive growth, raking in revenue, and expanding their offerings, one tidbit of information from the company’s latest quarterly report should concern some investors. It’s all about shipping costs, and Amazon.com, Inc. (NASDAQ:AMZN) has seen these costs rise consistently over the last several quarters. While this is natural since the company is growing, shipping costs as a percentage of revenue is also rising at an alarming rate. Last quarter shipping costs as a percentage of sales rose to 12.5%, versus 10.9% the year prior.

If Amazon can’t get these costs under control, they will have a hard time meeting future expectations. This may be one reason why the company has been looking into becoming a shipping company themselves. If they can cut out the middleman then they can save a boatload of cash.

The stock is down 8.84% or $56.17 following the news, hitting $579.18 per share. About 6.55M shares traded hands or 21.75% up from the average. AMZN has risen 44.12% since June 24, 2015 and is uptrending. It has outperformed the S&P500 by 52.99%.

From a total of 26 analysts covering Amazon.com (NASDAQ:AMZN) stock, 22 rate it a “Buy”, 0 a “Sell”, and 4 a “Hold”. This means that 85% of the ratings are positive. The highest target price is $900.0 while the lowest target price is $525. The mean of all analyst targets is $734.31 which is 26.78% above today’s ($579.18) stock price. Amazon.com was the topic of 64 analyst reports since July 21, 2015 according to the firm StockzIntelligence Inc. Susquehanna initiated shares on January 15 with a “Positive” rating. M Partners initiated shares with a”Buy” rating and a $800.0 target share price in their report from a December 15. Monness Crespi & Hardt downgraded AMZN stock in a recent report from January 4 to a “Neutral” rating. Barclays Capital maintained the rating on December 1. Barclays Capital has a “Overweight” rating and a $850 price target on shares. Finally, Macquarie Research maintained the stock with a “Outperform” rating in a report they issued on a December 22.

The institutional sentiment increased to 1.49 in Q2 2015. It’s up 0.37, from 1.12 in 2015Q2. The ratio increased, as 67 funds sold all their Amazon.com, Inc. shares they owned while 376 reduced their positions. 166 funds bought stakes while 493 increased their total positions. Institutions now own 325.29 million shares which is 4.94% more than the previous share count of 309.99 million in 2015Q2.

Huntington Steele Llc holds 23.61% of its total portfolio in Amazon.com, Inc., equating to 103,872 shares. Tiger Global Management Llc owns 3.19 million shares representing 20.13% of their total US portfolio. Moreover, Tybourne Capital Management Hk Ltd has 18.16% of their total portfolio invested in the company, equating to 504,001 shares. The Washington-based Brighton Jones Llc has a total of 17.93% of their portfolio invested in the stock. Telemark Asset Management Llc, a Massachusetts-based fund reported 100,000 shares owned.

Since May 4, 2015, the stock had 0 insider buys, and 11 selling transactions for a total of $27.04 million in net activity. Stonesifer Patricia Q sold 6,250 shares worth $3.16 million. Wilke Jeffrey A sold 5,908 shares worth $3.16M. Reynolds Shelley sold 720 shares worth $381,752. Olsavsky Brian T sold 2,098 shares worth $1.11M. The insider Zapolsky David sold 2,322 shares worth $1.23 million.

Amazon.com, Inc. is an e-commerce company. The company has a market cap of $271.50 billion. The Firm sells a range of services and products through its Websites. It has 840.17 P/E ratio. The Company’s products are offered through consumer-facing Websites, which include merchandise and content that it purchases for resale from vendors and those offered by third-party sellers.

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