Amazon Stock Struggles Despite Kindle Fire, Online Shopping

What is the deal with Amazon stock?

With all the online shopping talk this holiday season, it would seem like a ripe time for Amazon. People are expected to do holiday shopping online in record numbers. In fact, online shopping jumped 24.3 percent alone on Black Friday this year, according to IBM's research of 500 online retailers.

Furthermore, the Kindle Fire is expected to sell millions, and it could pose a significant challenge to Apple's iPad. Altogether, Wall Street is expecting sales in the fourth quarter to reach $18.2 billion, up 40 percent from a year ago.

Yet shares of Amazon went down 3.49 percent to $182.40 Friday. Shares are down significantly from the 52-week high of $246.71, which was reached on Oct. 14.

The problem really isn't with Amazon's business fundamentals. Rather, it has been that the company shares may have peaked, at least for now. In the third quarter, Amazon's earnings slipped 73 percent.

Amazon is not immune to global economic concerns that have spooked the market, Frederick Moran, an analyst with The Benchmark Company told CNN. And valuation is concern for Amazon. Margins are under pressure in the short-term.

Indeed, although people are heading online to do shopping, people are tightening the belt all around as the economy remains on rocky footing. Furthermore, sales in Europe could be especially hard hit with the Eurozone crisis taking hold.

At $199 apiece, the Kindle Fire is naturally going to be a hot commodity. Yet, because of the low price, Amazon is expected to lose about $50 for each Fire sold. Clearly, the company is willing to take a short term hit in order to benefit from the device in the long haul by selling content.

Customers are also demanding free shipping, which could be putting a crimp on profits. Amazon is also spending a lot of money for things such as its cloud business.

Morningstar analyst R.J. Hottovy told CNN that Amazon may report a small loss for the fourth quarter, but the company isn't necessarily faltering.

Amazon is still a solid company but it may be best to wait until fourth-quarter numbers come out in January before buying the stock again, he said.