Amazon.com, Inc. (AMZN) Has ‘Ridiculous’ Operating Leverage, Says This Expert

Amazon.com, Inc. (NASDAQ:AMZN) has such a “sticky” business, analyst Daniel Ernst says, that it is worth banking on the company even though it has reported no bottom line for the quarter which ended March 31.

According to the Welch Capital Partners analyst in a dialog with CNBC’s Andrew Ross Sorkin, Joe Kernen and Rebecca Quick, it is still uncertain whether Amazon.com, Inc. (NASDAQ:AMZN)’s cloud arm, Amazon Web Services, will become a much more major business for the company in the future.

“It could be [bigger than the retail business] on a net basis but again, it is [just] 3% of their business [in the latest quarter]. I think at some point, we would see,” Ernst says.

Sorkin then prods Ernst whether what Amazon.com, Inc. (NASDAQ:AMZN) is doing is that it is showing investors and industry observers that it can make money if it wants to.

The company reported a net loss of $57 million, or negative $0.12 per share, for the January to March quarter, it’s first quarter for the fiscal year 2015, on net sales of $22.72 billion. Net income decreased from $108 million, or $0.23 per share, in the year-ago quarter. Net sales increased, however, from $19.74 billion also in the same quarter last year.

In the quarter before the January to March quarter, Amazon.com, Inc. (NASDAQ:AMZN) reported a net income which is why Sorkin asks Ernst whether reporting net incomes in some quarters is only a ploy by Bezos to show people they can make money if they wanted to.

“The potential for operating leverage at Amazon is ridiculous. It is an exceptionally sticky business. If they raise everything by 50%, would you stop using Amazon?” Ernst asks the CNBC hosts who replied no, adding that, “Amazon is so well-run, it is so easy to use. The day that Jeff Bezos decides that earnings is his top priority, it’s going to be a very interesting day.”

David Gallo’s Valinor Management LLC owned 268,130 Amazon.com, Inc. (NASDAQ:AMZN) shares by the end of the last three months of 2014.

I Just Made 84% in 4 Days By Blindly Following This Hedge Fund

I just made 84% in 4 days by blindly imitating a hedge fund’s stock pick. I will tell you how I pulled such a huge return in such a short time but let me first explain in this FREE REPORT why following hedge funds’ stock picks is one of the smartest things you can do as an investor. We launched our quarterly newsletter 2.5 years ago and not one subscriber has, since, said ‘I lost money by EXACTLY following your stock picks’. The reason is simple. You can beat index funds by creating a DREAM TEAM of hedge fund managers and investing in only their best ideas. I just made 84% in 4 days by blindly imitating one of these best ideas. CLICK HERE NOW for all the details.