October 27, 2011

Amazon stock continues to plunge wildly

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Amazon‘s stock continued to plummet yesterday, after the previous day’s shattering losses of more than $16 billion, with a “13 percent share-price plunge to $198.40,” which “wiped more than $2 billion off the value of Jeff Bezos‘s stake in the company.” Bezos’ stock had plunged as much as $4.67 billion the day before.

According to a Reuters wire story, Amazon, which has consistently shown sales growth every quarter throughout its history while simultaneously showing increasing losses, has taken investors to the limit. “What they’re willing to do is trade earnings for ever-increasing market share, but at some point you have to make a meaningful profit,” Regent Atlantic Capital head Chris Cordaro tells Reuters. “We can’t be buying something at 100 times earnings. That doesn’t make investment sense.”

Meanwhile, compounding the day’s bad news for Amazon, a Politico report notes that the company’s new tablet is raising questions that may force a reaction at the federal level:

“By leveraging their cloud computing power through the Silk browser, the Kindle Fire is utilizing some practices that raise net neutrality questions,” Scott Jordan, a computer science professor at the University of California, Irvine, told POLITICO. “Such questions revolve around whether the company is favoring one website over another and/or changing the content of a website through optimization.”

Those questions could refuel the debate that’s been roiling Congress and the Federal Communications Commission for the past year over net neutrality — the concept that all Web traffic should be treated equally.

Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House.

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