Amazon’s Wild Ride

Despite a disastrous malfunction of its cloud computing network in April and a disappointing quarterly earnings report that same month, Amazon.com Inc. continued to amaze market analysts as its stock price reached all-time highs in excess of $200 a share.

Serious trouble arose on April 21 when an outage at an East Coast Amazon data center caused major service disruptions for popular internet sites such as Quora, Reddit, Foursquare and Hootsuite, which use Amazon Web Services to host their sites. The outage lasted several days and sparked criticism because of Amazons communication of the situation.

Less than a week later, the company released a disappointing earnings report. Despite an increase in net sales of 38 percent for the second quarter, Amazons profits fell by 33 percent and operating expenses rose by nearly $3 billion. Shortly after the announcement, shares of the company fell by 2.5 percent to $177.77. Since that low point, though, the companys stock has climbed sharply. Stock prices shot above $200 and reached levels unseen in 10 years. One of the factors likely behind the dizzying rise is a number of technological innovations the company unveiled over the past several months, including a personal music cloud and storage drive, a lower-priced version of the Kindle eBook reader with sponsored content, instant videos for Amazon Prime users and an expanded array of Amazon products internationally.

Amazon also slashed the price of popular music singles in its online store to 69 cents in an obvious bid to challenge the dominance of Apples iTunes music store. The company added 4,200 new employees in the second quarter, capping off a year of intense growth that saw the workforce balloon by 45 percent to 37,900 employees.

In spite of Aprils cruelest news, Amazon has heavily invested in the future and openly challenged industry rivals. Wall Street investors seem to believe the companys best days lie ahead.