Why Are Amazon Investors So Thrilled?

While earnings missed expectations, revenue certainly did not. Sales pushed that figure up 22 percent, and shares jumped 11 percent in after-hours trading as a result, temporarily hitting an all-time high of $288. With the operating income up 56 percent to $405 million, an increase from $260 million in the fourth quarter of 2011, the Internet retailer may be showing signs of the transformation Bezos alluded to. “The fourth-quarter operating income was up more than expected,” Morningstar analyst R.J. Hottovy told Reuters. “This supports the bull case that Amazon can monetize its growth over the longer term.”

But there is also the bear case: The results may not be a transformation that Amazon has experienced, but the first sign of a problem. Ahead of the Tape columnist Spencer Jakab told The Wall Street Journal on Tuesday morning that the company’s margins, which keep narrowing, are half of what they were in 2009. With such razor-thin margins, Amazon has trouble earning money, the publication noted.