Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Amazon Tumbles After Missing Revenues And Earnings, Guiding Far Below Consensus

Courtesy of ZeroHedge View original post here.

With the bulk of the FAAMG stocks – which is now GAMMA following Facebook’s rebranding to Meta – reporting solid results, investors were keenly looking to Amazon earnings, where the biggest question for Amazon is how sustainable are the growth trends that boosted its performance during the pandemic. The Internet giant was one of the biggest beneficiaries of shifts in consumer and business behavior last year while continuing to grab market share in cloud.

Many consumers flocked to buy things online as they wanted to avoid infection at physical stores, with the recent Delta wave scare likely providing a further boost to Amazon. Further, Amazon Web Services revenue soared on back of rising usage from Internet digital services – including remote-working software, videostreaming and gaming. But with the wider availability of vaccines and as employees start to return to physical offices, the risk is some of these trends may start to reverse. Investors will be also looking for any commentary on the future prospects for regulation and antitrust legislation.

That said, Amazon is lapping last year’s blockbuster pandemic boost, and investors are aware it can’t match last year’s growth. Analyst estimate third-quarter sales growth of 16.3% to $112 billion – the high end of the company’s own guidance for Q3 of $106-$112BN – less than half the pace of growth of the same period a year ago. While slowing growth is anticipated, 16.3% for a company the size of Amazon is still remarkable.

A forward-looking question for today: How is Amazon’s profitability going to shake out after the company added millions of customers, hundreds of warehouses, and hundreds of thousands of employees in the past year?

Looking ahead, another key focus will be on how expensive the busy holiday quarter will be due to broken supply chains, shipping logjams and inventory shortages. As Bloomberg notes, Amazon is not afraid to spend big and sacrifice profits to stand out from competitors and this holiday season could be a moment to shine if everything around them is struggling. Profit is secondary to customer experience. In other words, watch the operating-income forecast for the fourth quarter for an indication of big spending plans.

* * *

So with that in mind, how did Amazon do in Andy Jassy’s second quarter as the company’s new CEO? Not good: not only did the company miss on the top and bottom line and operating income, but guided much lower than Wall Street expected:

  • Net Sales $110.8BN, up +15 Y/Y but missing estimates of $111.81B
  • EPS $6.12, down big from $12.37Y/Y and also missing estimates of $8.96
  • Operating Income $4.85BN, down 22%Y/Y missing est. $5.62B
  • AWS net sales $16.11 billion, up 39% and beating estimate $15.40 billion
  • Online stores net sales $49.94 billion, up 3.3% and missing estimates of $51.53 billion

Looking ahead, the company’s guidance was unexpectedly ugly, with the high end of expectations missing sellside consensus as the company sees several billion dollars in additional costs in 4Q.

  • Q4 Net Sales $130.0BN to $140BN, missing Wall Street est. $141.62B
  • Q4 Operating income between $0 billion and $3.0 billion, also badly missing estimates of $7.44BN

Commenting on the quarter, Andy Jassy said that “in the fourth quarter, we expect to incur several billion dollars of additional costs in our Consumer business as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs—all while doing whatever it takes to minimize the impact on customers and selling partners this holiday season. It’ll be expensive for us in the short term, but it’s the right prioritization for our customers and partners

In kneejerk response, the stock is tumbling after hours, sliding more than 3%.

Developing


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or get a FREE Daily News membership or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!