Einhorn Says Amazon’s Future a ‘Riddle’ as Profit Lags Sales

Greenlight Capital's David Einhorn
David Einhorn, president of Greenlight Capital Inc. Photographer: Peter Foley/Bloomberg

Greenlight Capital Inc. co-founder David Einhorn said Amazon.com Inc.’s future is a “riddle” because the world’s largest online retailer hasn’t shown it can increase profit in tandem with sales.

Einhorn made the remarks about Amazon today at the Sohn Investment Conference in New York. The Seattle-based company’s full-year sales have more than doubled since 2008, while operating income is up 2.4 percent in the same period.

“Over the last three years, Amazon has grown revenues from $19 billion to $48 billion,” Einhorn said. “Growing its operating profits has been harder. Amazon’s future is a riddle.”

Amazon Chief Executive Officer Jeff Bezos is sacrificing profitability in search of growth, looking to add customers by pushing free shipping and offering its Kindle Fire tablet at less than half the price of Apple Inc.’s iPad. The company’s operating margin narrowed to 1.79 percent last year from 4.39 percent three years earlier as Amazon ramped up spending on warehouses and expanded its line of Kindle electronic readers.

Einhorn has put pressure on companies such as Green Mountain Coffee Roasters Inc., questioning its accounting disclosure in October, and is known for betting against Lehman Brothers Holdings Inc. before it collapsed in September 2008.

His comments on Amazon also included remarks such as “Holy Amazon, Batman,” and “there’s an elephant in the room.”

Einhorn separately prompted an 8.2 percent drop in Martin Marietta Materials Inc.’s stock today -- its biggest decline since December 2008 -- after he said the sand-and-gravel producer benefited from a “one-time fiscal stimulus that is about to wind down.”

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