Amazon's Massive Spending Plan: A Repeat of Past Success or New Risks?
Top investor Daniel Sparks warns against judging Amazon's (NASDAQ:AMZN) massive $220 billion spending plan based solely on history. In a recent analysis, he points out that two years with significant investments, 2014 and 2022, were followed by major rebounds.
During these years, AMZN posted net losses of $241 million in 2014 and $2.7 billion in 2022. However, the stock prices still rose significantly after each period, with a 118% increase in 2015 and an 81% gain in 2023.
Sparks suggests that the key factor was not the spending itself but rather the company's inability to keep up with expenses on its income statement. In contrast, this year, AMZN has reported substantial growth figures, including Q2 operating income of $27.5 billion and a 43% increase in AWS revenue.
With its strong financial performance so far, Sparks believes that Amazon's current spending plan is not a reason to sell the stock.