Amazon's Profitability Can Further Decline In The Future (Part 2 of 2)

Under a base case and pessimistic scenario, we think the company's EBIT margin could fall to -3% and -6% respectively in 2017, as compared to 1% in 2013. And under an optimistic scenario, its operating margin could improve to around 2-3% by 2017 - we have modeled this scenario in our valuation model, as we think the company will start tackling its expenses more seriously, given the recent investor pressure.