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Is Amazon’s Winning Streak Over?

Amazon.com Inc.’s (NASDAQ:AMZN) record quarterly profit streak has ended,” declares The Wall Street Journal, “as the online retailer faced higher shipping costs, slowing growth from its cloud-computing business and a steeper loss in its overseas retail business.”

But it wasn’t all bad news. Amazon’s sales continue to grow and second-quarter revenue numbers beat estimates. It’s the e-commerce giant’s bottom line that took the hit due to its push to make universal one-day shipping a reality for Prime customers.

Management notes the one-day transition has been a “shock to the system” as shipping costs jumped during the quarter. The hit to the company’s net income was certainly a shock to investors last night as sellers pushed Amazon shares lower by more than 2.5%. The stock is set to open near its July lows this morning.

AMZN

Even as Amazon shares slide to close out the trading week, it’s difficult to imagine this earnings setback will lead to any long-term damage on Amazon’s nearly $1 trillion market value.

After all, Amazon has been down this road before. The company has a long, successful history of instituting sweeping change and new programs that temporarily stunt profitability, yet ultimately accelerate growth and help push the stock to new highs. I doubt one-day Prime shipping will be the end of Amazon’s dominance…

Meanwhile, Starbucks Corp. (NADSAQ:SBUX) is set to open at new all-time highs after upping worldwide growth projections.

Starbucks blew analyst estimates out of the water last night and even raised full-year earnings and revenue forecasts.

“Sales at U.S. stores open at least a year grew by 7%, driven by 3% traffic growth after several quarters of struggling to improve traffic,” CNBC reports. “Analysts were predicting U.S. same-store sales growth of 4.4%. More customers were visiting cafes during all times of the day, including the afternoon. Starbucks has been trying to drive customers to its stores later in the day with promotions like Happy Hour.”

Starbucks shares have been on an absolute tear in 2019, gaining more than 42% year-to-date. It will add to those gains today as the stock is set to open higher by more than 6%.

SBUX

Digging a little deeper into one of this week’s biggest earnings disasters, what the hell is wrong with GNC Holdings Inc. (NYSE:GNC)? 

Even a steady supply of vitamins and supplements couldn’t help GNC this earnings season. Shares dropped more than 9% on Tuesday after the wellness retailer reported second quarter earnings.

The headline number came in the form of store closings — hardly a bullish look. GNC is set to close 900 stores to reduce its “mall count” by nearly half. More than a quarter of GNC’s stores are in malls, which would explain some of the issues plaguing the company. After all, most shoppers are probably getting their supplements through online retailers these days.

Strangely enough, GNC is now working with Amazon. But this little partnership hasn’t helped turn around the company’s flagging stock.

To make matters more confusing, a company owned by the Chinese government called Harbin Pharma bought a 40% stake in GNC last year, Reuters reports. But that hasn’t stopped GNC shares from dropping almost 45% over the past 12 months — even as the major averages have posted new all-time highs.

GNC

Zoom out a little more and GNC’s prospects look even more bleak. The stock has remained locked in a nasty downtrend for more than 5 years. Since the beginning of 2014, it has lost almost 97% of its value. Ouch…

Finally, if you’ve ever wondered how you could make an otherwise harmless drone a lethal threat to your friends and neighbors, ThrowFlame has the product for you. 

For $1,500 you can slap a flamethrower on the drone of your choice and start burnin’ everything in sight.

The TF-19 WASP connects to the bottom of any drone that’s capable of carrying at least five pounds, reports Business Insider. It can shoot flames about 25 feet and has a fuel capacity of about a gallon for all your torching needs.

WASP

Your friendly neighborhood TF-19 WASP in action

What would you need a drone-mounted flamethrower for?

Outside of any sinister (or very illegal) plans, I have no idea. ThrowFlame suggests using it to clear brush and wasp nests — but I’m sure we’ll see all type of creative flamethrower usage on YouTube in the near future.

Sincerely,

Greg Guenthner

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Opening Bell Fortunes and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing since 2005. In 2019, the average position in Greg’s Sunrise Fortunes portfolio outperformed the S&P 500 by 1.65x.

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