The company reported earnings per share for the quarter ended June 30 of $7 million, or a penny a share, on revenue of $12.83 billion. Analysts had expected EPS of two cents a share on revenue of $12.92 billion.
Amazon.com's Q2 numbers compared with earnings of $191 million, or 41 cents a share, on $9.9 billion in sales during the same period a year ago.
For Amazon.com this was a 96% drop in its second-quarter earnings from a year earlier. The company also forecast a third-quarter operating loss between $50 million and $350 million.
Amazon stock immediately fell about 7% in after-hours trading and appeared to be setting up for abysmal numbers today (Friday).
Fortunately for Amazon shareholders, the stock reversed course and soared to a 10-month high. AMZN closed up 7.87% at $237.32.
Why the turnaround?
Here's what smart investors were able to see when they looked at the numbers.
A Closer Look at Amazon.com (Nasdaq: AMZN) Earnings Even though profits were much lower than the same period a year ago, the company's gross profit margin, a closely watched measure of profitability, topped 26% in the second quarter - the highest level in at least nine years.
Money Morning's Chief Investment Strategist Keith Fitz-Gerald explained that what's really behind Amazon.com's huge profit drop is CEO Jeff Bezos doing some smart spending.
"I love it," Fitz-Gerald told Fox Business' "Varney & Co." host Stuart Varney when he joined the program Friday. "Bezos goes on the warpath and he says, "You know what? I'm going to spend right through this, I'm going to get into cloud computing, I'm going to do things on my technology, I'm going to make it easier, faster and better for my customer to get what they want,' - and the market rewards him."
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