Why Amazon Never Fails to Surprise
Subhadeep is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Online giant Amazon (NASDAQ: AMZN) sure has a somewhat inverted way of showing results. While revenues climb up stupendously for this company, earnings always continue to remain slim. While this can be attributed to the high operating expenses that it incurs, investors are never shy of betting their hard-earned money on a company that has been displaying a fantastic price-to-earnings ratio lately. The answer probably lies in the innovative ways in which Amazon finds out a new avenue of revenue growth time after time – a pleasant surprise for investors.
And now, the company has jumped into the realm of online gaming as its first offering titled ‘Living Classics’ debuts on Facebook (NASDAQ: FB). The company has opened up its own gaming studio and is fast hiring more game developers in a bid to enter a scenario which is dominated by the likes of Zynga (NASDAQ: ZNGA). The big question is – will this be another revenue winner for the company, considering that Facebook itself is under pressure to devise ways to monetize itself? Not to mention the fact that Zynga, which has till now been riding piggyback on Facebook’s success, has been witnessing a steady erosion of its active game users recently.
But then, Amazon has always been willing to take risks, and that’s why it’s a proven winner in so many areas today. Yes, there have been a few disappointments like the Kindle Fire sales, but even then the company is going ahead and planning to revamp the product in a major way. It’s also investing in things like warehousing and a movie streaming division to compete with giants such as Netflix, while always putting the interests of its customers in the forefront. The last part is evident from its introduction of the ‘locker’ system to smoothe out potential retail shipping hiccups.
Coming back to gaming, while it’s true that Facebook growth has seen a recent downslide, online gaming is still perhaps a good way to test the waters, given that the company will surely go for exclusive gaming content for its future tablets designed to compete head to head with Apple’s iPad. Till then, Amazon sure has enough reasons to bank on the 8.3 million ‘Likes’ that it has on Facebook. That said and done, this is one company that has the potential to topple any established company (remember Best Buy?) just by its sheer size and operational efficiencies. Once again, its time to keep a close watch on Amazon, I say.
subhadeeptech has no positions in the stocks mentioned above. The Motley Fool owns shares of Amazon.com and Facebook. Motley Fool newsletter services recommend Amazon.com and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.