Tags: Max Wolff | Amazon | Chuck Schumer | Janet Yellen

Amazon's Historic Day; McDonald's Seeking a Break

By    |   Friday, 24 July 2015 10:43 AM

Analysts were stunned as Amazon surged 83 points after it reported earnings up more than 20%. Max Wolff, of Manhattan Venture Partners, credited Amazon with “just letting themselves shine” by cutting back on the investments that have caused some hesitation by investors in the past. He said, “They can knock the cover off the ball, and they did that.” In other words, it was a choice the company made to do its best this quarter rather than to invest in future performance.

Susan expressed wonder that Amazon’s cloud business grew by more than 80%, but she was not impressed by the recent Prime Day, which she said “kinda sucked.” Wolff countered that the day, while “disappointing” as to sales, succeeded in signing up a lot of customers who will be buying in the future, which is “huge for the company.” Susan wasn’t done and complained that “for $99, (customers) would expect better deals.” She then asked whether a multiple of 269 times forward earnings is “the wrong way to measure how great Amazon would be in your portfolio.”

Wolff responded that the company has proven it can provide earnings “pretty easily, because they’re so darned dominant, and they’re so good.” He added, “They’re the dominant player in e-commerce, so you kind of have to like the name, although it’s not exactly on sale.” He concluded that Amazon is “probably sideways money,” but a good place to be in a slowing economy. (Perhaps he will call Janet Yellen and tell her the economy is slowing, but Sen. Chuck Schumer (D-NY), and his colleagues have evidently been doing that.)

As Amazon soared after hours, Fast Money’s Tim Seymour noted that the company is reaping the benefits of spending $12 billion on infrastructure over the last three years. Now, he said, “People are going bananas right now, because people were not expecting that.” Josh Brown called it “absolutely incredible” that Amazon has been able to capitalize on having cut its prices for cloud services a year ago, “one of the most incredible stories of the year, without a doubt,” up more than 65%.

After all the excitement over Amazon, one almost has to decompress to look at struggling McDonald’s (MCD), whose profit declined 13% for the quarter, but Peter Saleh. MD, Restaurants, at BTIG, did just that and found declines in Asia due to food safety issues and negative comps in the U.S. He remarked, “They just can’t seem to break out of that range, and until they do, I think the stock kind of treads water.” In response to a question from Susan, Saleh underscored the importance of Asia as “the fastest growing area of the world for them.” He also doubts that all-day breakfasts will work, because checks are lower, and breakfast could cannibalize lunch. Saleh has been “neutral for many years” pending “traffic stabilization” in the U.S. He agreed with Susan that Starbucks (SBUX) is “on fire,” and he sees that company “headed in a completely different direction” from McDonald’s due to its digital effort.

Finally, the Fast Money traders graded recent earnings reports. Brian Kelly gave Amazon’s earnings an A+ but expressed concern going forward and advised investors not to be afraid to take profits. Tim Seymour gave Starbucks an A but wants to know more about areas for future growth. Josh Brown gave Visa (V) a V, for “very good,” calling it “a gigantic company” that investors should own if they think things are getting better. Guy Adami gave a B to Pandora (P).

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Analysts were stunned as Amazon surged 83 points after it reported earnings up more than 20%.
Max Wolff, Amazon, Chuck Schumer, Janet Yellen
Friday, 24 July 2015 10:43 AM
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