Matthew Yglesias writing at Slate:
If a large retailer announced a loss of a few hundred million dollars in quarter three, about half related to its core retail business and about half related to its investment in a high-tech startup the culprit would be obvious—competition from Amazon. And if a tablet manufacturer announced a loss in quarter three, the culprit would again be obvious—competition from Amazon. Except the company in question is Amazon itself which beneath a press release of "Amazon.com Announces Third Quarter Sales up 27% to $13.81" said it lost $274 million about half of it related to Living Social.
And this is what makes Amazon the most amazing company in the world today. Obviously it can't keep losing money like that every quarter, and it probably won't. But most quarters it earns very low profits, with margins so thin that happenstance can force it into things like its Q3 loss. As deliverer of services to consumers, it's incredible but as a generator of income and earnings it totally sucks.
But what makes Amazon not just amazing but downright dangerous is that as a financial matter it has something even better than profits—the boundless faith of the investment community. You can think of a company's stock price as jointly determined by its profits ("earnings") and by Wall Street's level of optimism about the future, expressed as a price-to-earnings ratio....MOREHT: Counterparties