Amazon shares springs back

Shares of Amazon.com recoiled after the firm posted second-quarter earnings that missed Wall Street's estimates as it topped infrastructure and marketing spending. Shares were down by 5% at $114 after opening with a drop more than 12%.

The stock had already fallen by 20% since the company's last earnings report in April, which also gave rise to concerns about increased spending. Even at its current levels, Amazon still trades at more than 35 times estimated earnings for the next four quarters.

Sandeep Aggarwal of Caris & Co. wrote that the name typically trades on rich multiples; a negative surprise quarter does not cut for Amazon in which he downgraded the stock to an average rating.

For the second quarter, Amazon said it earned $207 million, or 45 cents a share, compared to earnings of $142 million, or 32 cents a share, for the same period last year. Revenue grew 41% to $6.57 billion. See full report on Amazon's results.

According to consensus forecasts from FactSet Research, analysts were looking for earnings of 53 cents a share on revenue of $6.5 billion

Operating income jumped 71% to $270 million. Analysts had been looking for about $320 million for the quarter. Fulfillment costs jumped 42% to $582 million for the quarter compared to last year's June period. Marketing costs rose 64% to $211 million.

In a conference call with analysts, Amazon Chief Financial Officer Tom Szkutak said the company was growing fast with plans to open 13 new fulfillment centers this year.

Imran Khan of J.P. Morgan wrote in a research report that the timing of the build-out, with the company aiming to have all the centers done by the holiday season, implies a one-two quarter dip in profitability, rather than the beginning of an extended process.

Amazon anticipates revenue within the range of $6.9 billion to $7.6 billion for the third quarter.