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Amazon.com (Nasdaq: AMZN) fell 2 21/32 to 25 1/32 Tuesday after Banc of America Securities analysts said they expect the e-tail giant to experience a slowdown in growth next year.
"We are becoming incrementally cautious on the stock, based on our belief that Amazon's rate of growth will slow considerably in calendar 2001, without sufficient visibility on future profitability," wrote Banc of America analyst Tom Courtney.
Courtney, who maintains a "market performer" rating on Amazon, said investors would do well to "avoid the stock."
"Although it may have one last run going into the holiday period, we believe that Amazon has several red flags that demand investor attention," Courtney wrote. Among them, he said, are a slowdown in the rate of growth at the company's core business, big losses in its early-stage businesses, and a decline in the number of repeat customers.
Analysts at S.G. Cowen also reportedly made cautionary comments about Amazon, saying a slowdown in overall consumer spending and competition from brick-and-mortar retailers could curtail growth.
The comments came as Amazon announced yet another product offering, saying it plans to sell wireless phones over its Web site. Analysts have questioned the company's expansion strategy, saying it could have a hard time achieving profitability even as it expands.
Amazon's third-quarter results showed "surprisingly large losses" for its early-stage business section, wrote Banc of America's Courtney.
Excluding the Amazon Commerce Network, the segment lost US$82 million to $100
million, for an operating margin of negative 82 percent, he wrote.
