Today (Thursday) after closing bell, Amazon.com (Nasdaq: AMZN) revealed Q4 earnings that missed analysts' aggressive estimates that growth would increase 238% from a year prior.
Instead, AMZN earnings per share came in at $0.51 on sales of $25.59 billion, $0.15 below the consensus $0.66 per share on sales of $26.06 billion.
There are a few reasons why Amazon's miss today should actually signal a buy for investors.
First, Amazon has missed nine of the last sixteen quarters; in Q3, revenue fell year over year, breaking a three-quarter streak of rising revenue.
Yet, AMZN investors have seen the stock go up more than 40% over the last year.
Second, today's earnings actually still represent a 148% increase in EPS from a year ago - $0.21 per diluted share in Q4 2012 versus $0.51 per diluted share in today's Q4 2013.
Third, for the full year of 2013, net sales increased 22% to $74.45 billion, compared with $61.09 billion in 2012. Amazon reports that the number actually would've been a 24% increase, if not for the negative impact from year-over-year changes in foreign exchange rates.
In Q4 alone, net sales increased 20% to $25.59 billion in the fourth quarter, compared with $21.27 billion in fourth quarter 2012.
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Fourth, Amazon announced a record-setting holiday season for Amazon Prime (it didn't provide numbers). In December, Prime became so popular that Amazon was forced to limit new Prime membership signups during peak periods for the first time ever.
AMZN stock is paying the price for missing earnings - it's plunged over 8.5% in after-hours trading, from a close of $403.01 to $369 as of 4:55 pm EST.
But the Amazon stock drop creates a unique opportunity for investors to get in on this company at a discount.
Here's why Amazon is still one of the best investments of 2014...
Why Amazon Earnings Miss Doesn't Matter
The key to Amazon's success is innovation.
"These guys leave no stones unturned for the next dollar they can bring in," said Money Morning Defense & Tech Specialist Michael A. Robinson. "Amazon is constantly upselling, cross-selling, and looking for new products, and they're great at it."
Amazon is one of the world's largest online retailers, but it also creates original media content in its publishing division, offers cloud services, and sells products like the popular Kindle.
Popular is an understatement: On Dec. 26, Amazon announced it sold 426 items per second on 2013's Cyber Monday, including more Kindles than ever before in the company's history. That comes out to more than 36.8 million items ordered in 24 hours.
Also in late December, Amazon won a patent for a shipping method that could drastically decrease shipping times...
"They already do anticipatory shopping - customers see that every time they open the web page. Now they want to expand that to anticipatory shipping," said Robinson.
With the patent, AMZN will strengthen its spot as the No. 1 online retailer by boasting some of the fastest delivery times for online purchases.
Another major reason for AMZN's success... Amazon Prime.
Amazon Prime is a membership service that offers free two-day shipping, unlimited movie streaming, and one free borrowed e-book per month for a total of $79 per year. In just one week in December, Amazon Prime gained more than 1 million new subscribers. Now we know, post-earnings, that Prime is alive and well - and setting records all on its own.
Additionally in December we learned that AMZN will launch Pantry, a membership warehouse that allows members to buy consumer package goods. Pantry opens the gateway for Amazon to compete with Costco Wholesale Corp. (Nasdaq: COST), Sam's Club, and Wal-Mart Stores Inc. (NYSE: WMT).
Robinson believes developing Pantry fits right in Amazon's wheelhouse and credits a lot of the company's success to Amazon Chief Executive Officer Jeff Bezos.
Bezos is "brilliant at logistics," said Robinson. "[He] is going to go down in history as one of the great tech innovators of all time."
Amazon stock went up a whopping 62% in 2013 - and will keep going.
"Once this franchise is built out, there are billions of dollars in cash flow that will fall to the bottom line," Robinson said.