Stock Watch: Expanded Amazon Relationship Carries Drugstore.com

Shares of online pharmacy Drugstore.com (Nasdaq: DSCM) rocketed more than 20 percent on Monday, gaining 5-7/8 to 35 after Amazon.com announced the expansion of an existing alliance with the company.

Amazon.com will receive $105 million over three years from Drugstore.com in exchange for promotion. Under the terms of the deal, Drugstore.com will be featured as a permanent part of Amazon.com’s navigation. Drugstore.com is the first Amazon.com investment partner to receive this form of promotion.

In addition, Amazon.com will make an additional $30 million investment in Drugstore.com, boosting its stake in the online pharmacy to about 28 percent. Shares of Amazon.com also performed well on Monday, climbing 8-1/16 to 70-1/8.

After the markets closed on Monday, Drugstore.com announced fourth-quarter net sales of $18.5 million, a 52 percent increase over the $12.2 million reported in the third quarter. Unsurprisingly, Drugstore.com is still losing a lot of money. The company had a fourth-quarter net loss of $41 million, or 96 cents per share.

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