Friday, September 30, 2022
US Daily News Onlne


Amazon.com • NASDAQ:AMZN • Stock • Earnings – current statistics online

It’s a big week for tech firm earnings reports. Google and Microsoft have already reported on Thursday, after markets close,…


It’s a big week for tech firm earnings reports. Google and Microsoft have already reported on Thursday, after markets close, it’s Apple and Amazon’s turn.

Traders are looking to the tech behemoths for some good news.

Amazon sign on the window of the Amazon Hub Locker in the downtown area, Silicon Valley

“The street right now, it’s a white-knuckle period,” said Dan Ives, a managing director at Wedbush Securities. “We need to see strong numbers from both Apple, as well as Amazon, to give a shot in the arm of confidence, especially in this Fed hiking cycle.”

The Fed raised interest rates in March by a quarter of a percentage point and Chairman Jerome Powell said a half point hike is on the table in May.

But that’s not all businesses are dealing with: The supply chain is still an issue and, of course, there’s inflation.

What happened
Shares of Amazon.com (AMZN 4.65%) were up 1.9% in morning trading Thursday at 11:03 a.m. as the e-commerce giant prepares to release its first-quarter earnings report after the markets close.

Analysts are expecting double-digit growth from Amazon, with revenue forecast to hit $116.3 billion in the quarter, an 11.3% increase from last year, though profits are expected to tumble 48% to $8.36 per share.

So what
The economy is in rough shape, with gross domestic product collapsing 1.4% in the first quarter compared to the 1% gain economists had been expecting, according to the Bureau of Economic Analysis. The lingering impact of COVID, the supply chain crunch, and the cost of rampant inflation was taking a toll.

Real disposable income fell 2% for the period, while the personal consumption expenditures (PCE) index roared ahead 7%. Even controlling for the volatile categories of food and fuel, the PCE index was 5% higher.

Higher costs and lower disposable income adds a wildcard to Amazon’s earnings for the period.

Amazon.com, Inc.
Trade name
Amazon
Formerly Cadabra, Inc. (1994–1995)
Type Public
Traded as
  • Nasdaq: AMZN
  • Nasdaq-100 component
  • S&P 100 component
  • S&P 500 component
ISIN US0231351067
Industry
  • E-commerce
  • Cloud Computing
  • Artificial intelligence
  • Consumer electronics
  • Entertainment
  • Digital distribution
  • Self-driving cars
  • Supermarket
Founded July 5, 1994; 27 years ago
Bellevue, Washington, U.S.
Founder Jeff Bezos
Headquarters
Seattle, Washington

,

U.S.
Area served
Worldwide
Key people
  • Jeff Bezos
    (executive chairman)
  • Andy Jassy
    (president and CEO)
Products
  • Echo
  • Fire Tablet
  • Fire TV
  • Fire OS
  • Kindle
Services
  • Amazon.com
  • Amazon Alexa
  • Amazon Appstore
  • Amazon Luna
  • Amazon Music
  • Amazon Prime
  • Amazon Prime Video
  • Twitch
  • Ring
  • Amazon Web Services
Revenue Increase US$469.822 billion (2021)
Operating income
Increase US$24.879 billion (2021)
Net income
Increase US$33.364 billion (2021)
Total assets Increase US$420.549 billion (2021)
Total equity Increase US$138.245 billion (2021)
Owner Jeff Bezos (14.0% voting power, 10.6% economic interest)
Number of employees
Increase 1,608,000 (Dec. 2021)
U.S.: 950,000 (June 2021
Subsidiaries

List
Website amazon.com
Footnotes / references

In the three months that ended March, the Seattle-based company is expected to earn earn $8.13 per share on revenue of $116.29 billion. This compares to the year-ago quarter when earnings came to $15.79 per share on revenue of $104.46 billion. For the full year, ending in December, earnings are expected to decline 28% year over year to $48 per share, while full year revenue of $539.22 billion would rise 14.8% year over year.

While Amazon is well-diversified business, the company has also suffered due to slowing revenue growth. The company has had to navigate multiple headwinds impacting e-commerce business over the past year. Aside from rising costs, and higher inflation, the company has had to deal with labor shortages. And the Russia-Ukraine conflict is poised to add additional pressure on near-term profitability not only for the just-ended quarter, but also for the rest of the year. The projected 28% decline in fiscal 2022 profits is nothing to discount.

That said, analyst Ronald Josey remains optimistic about the company’s ability to emerge from these headwinds. “And while we acknowledge higher operating costs are likely to impact margins in the shorter-term given the rising cost of transportation, we believe Amazon should benefit from improved operational efficiencies at its new Fulfillment Centers, the closing of some of its physical retail locations, and the lapping of COVID-related labor shortages.”

BofA Global Research analyst Justin Post last week trimmed his forecast for the first quarter to reflect lower international revenue growth, and he reduced his outlook for the second quarter in part to adjust for an anticipated shift of the company’s annual Prime Day sales event into the third quarter, from the second quarter. He also sees an impact from both foreign exchange and higher gas costs, and notes that a 20% year-over-year increase in gas prices could drive $2.5 billion higher annual expense.

Post nonetheless remains an Amazon bull. “Inflation clouds the 2022 margin recovery story, but Amazon remains our top FANG stock,” pointing to an expected second-half acceleration in e-commerce revenue, improving margins off a very low base, and enterprise exposure in AWS.

Evercore ISI analyst Mark Mahaney thinks first-quarter estimates look reasonable, but he cautions that the Street might be too bullish on the second quarter. He notes that the consensus calls for 7.7% sequential growth from the March quarter, above the 4% to 6% growth in the last four non-Covid years. And Mahaney also sees risks from the strong currency headwinds, inflation, supply chain constraints and potential softening in European and global consumer demand. Mahaney nonetheless keeps his Outperform rating on the stock.