Amazon stock drops amid big discounting

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Online retail giant Amazon (AMZN) touted its Cyber Monday sales traffic as its best in history, but that didn’t help its share price: The stock slid as investors balked at the company’s large discounts.  

Amazon fell $13.60, or 1.7 percent, to $766.77 on Monday after Citigroup (C) analysts cut their price target on the stock, citing the retailer’s deep discounting to compete during the holiday shopping season. The shares have tumbled 9 percent from the recent high in early October. 

Is Amazon developing its own delivery service?

Amazon has achieved its goal of scoring ever-higher revenue, but its profitability has been another story. It was in the red in 2012 and 2014, and this year earnings have been erratic.

To Wall Street’s dismay, Amazon has long given short shrift to boosting its earnings. Instead, it diverts capital to build out its infrastructure, most recently with a series of new warehouses, which it calls fulfillment centers.

As the final day of the Thanksgiving weekend selling spree ended, the e-commerce giant was offering 15 percent off a Kindle Voyage e-reader, 84 percent off on an Alpine Swiss Jake pea coat, 33 percent off a Fire HD 8 tablet and half off a Sony Blu-ray streaming disc player.  

Among retail stocks in general, skepticism was widespread about what good all that discounting was doing for the bottom line. The SPDR S&P Retail (XRT) exchange-traded fund dropped 1.2 percent on Monday. This was a down day for Wall Street as a whole, although the large indexes’ descent was less steep than Amazon’s: Both the S&P 500 and Nasdaq were about a half percent lower. 

Overall, consumer discretionary stocks were among the hardest hit, following the closely watched post-Thanksgiving sales push. Barnes & Noble (BKS) fell 30 cents, or 2.3 percent, to $12.50 on reports the bookseller is also slashing prices to attract customers.