Amazon introduced its brand new Fire Phone today and investors responded by bidding the stock up almost $9 to $334.38. The stock is still far below its all time high of $408.06 but the good reception today is a great sign going forward for the stock. Obviously, the mobile phone business is a tough one and any traction the Fire Phone can get will eat into the profits of Samsung and Apple.
To get an up to the minute perspective of what investors are saying about Amazon’s stock, take a look at the feed from StockTwits. Admittedly, the posters can be anybody and may or may not be investors. It is a free for all over there on StockTwits with a lot of silly ideas and junk posts but you can use it to see what stocks are being talked about the most. Today, the Amazon feed is on fire (pun intended) and will probably be quite active for weeks to come.
Whenever there is a major product announcement from any one of the big time tech companies, the stock of that company can be subject to knee jerk reactions from investors. Amazon stock ended up today but overnight investors may become less enthusiastic about the Fire Phone and begin to sell the stock. We shall see. But for right now, Amazon’s new phone is perceived as a winner that might be adopted in great enough numbers to take some market share away from the leaders and increase sales in Amazon’s marketplace. After all, the real purpose of the Fire Phone is to make it easier for people to shop on Amazon and to give them more reasons to do so.
By any metrics, Amazon stock is expensive. Real expensive. With a P/E over 500, investors have continued to give the company a pass on generating profits in exchange for the pursuit of expansion. The stock has gone down for most of 2014 but seems to be on the way back up at the moment. This unexpected release of the Fire Phone has gotten Amazon back in the news in a big way and will probably aid the stock it its attempt to regain all time highs. But again, the mobile phone business is just about the most competitive industry there is and whether this new handset can get any long term traction is something that is unknown at this point.