‘Rinse, lather, buy the dip’: Here’s how 3 Wall Street analysts are reacting to Amazon’s 2nd-quarter earnings

Amazon Fresh UK store
Amazon Fresh UK store

  • Amazon’s mixed second quarter earnings results led to a more than 7% decline in the stock on Friday.
  • The company reported $113 billion in revenue, missing analyst estimates by about $2 billion.
  • Here’s how 3 Wall Street analysts reacted to Amazon’s second quarter earnings report.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Shares of Amazon fell more than 7% on Friday after the e-commerce giant released second quarter earnings results that beat profit estimates but missed revenue estimates.

Friday’s decline represented Amazon’s worst day since the onset of the COVID-19 pandemic in March of 2020, but Wall Street analysts remain bullish on the company’s long-term growth prospects.

Amazon reported second-quarter revenue of $113.1 billion and earnings per share of $15.12, missing analyst estimates of $115.1 billion and beating estimates of $12.32, respectively.

The company said it expects revenue of $106 billion to $112 billion in the third quarter, which would represent year-over-year growth of 10% to 16%. Still, that’s well below analyst estimates of $118.7 billion in third-quarter revenue. Amazon gave a wide third quarter guidance range for profits, guiding for $2.5 billion to $6.0 billion in operating income.

As investors navigate Amazon’s results, here’s how three Wall Street analysts reacted to the second quarter earnings report.

Stifel: “Rinse, lather, buy the dip.”

“While Amazon missed overall topline numbers, the shortfall was primarily concentrated in Online Stores which includes first party sales (the lowest multiple business line). The higher margin AWS, advertising, subscription and 3P business lines outperformed our expectations, with AWS growth accelerating sequentially,” Stifel said in a note on Thursday.

The firm said the current sell-off makes for an attractive setup “now that shares are on the other side of the COVID comp reset,” according to the note.

Stifel reiterated its Buy rating and $4,400 price target, and advised investors to take advantage of the 7% sell-off.

JPMorgan: “AWS & Advertising were bright spots in an otherwise tough quarter.”

“While street estimates will come down, Amazon is still running at a 2-year compound annual growth rate of 25% to 30%, which is above its pre-pandemic growth rate of ~20%,” JPMorgan said in a note on Thursday.

The bank noted that the weaker-than-expected earnings results were driven by higher labor costs, less operating leverage on slower volume growth, and marketing costs returning to more normalized levels.

“Amazon is still catching up with strong multi-year demand and 2021 is shaping up to be another big fulfillment build-out period on the heels of 50% square footage growth in 2020. Slower growth and increased investments make the shares more challenging near-term, but we expect revenue growth to normalize more around 20% next year and Amazon’s investments in fulfillment and logistics bode well for future growth,” JPMorgan said.

JPMorgan reiterated its Overweight rating and lowered its price target to $4,100 from $4,600.

Bank of America: “Reopening pressuring sales, but just a blip in long-term penetration trend.”

“While outlook was disappointing, and bears could argue Amazon is investing in 1-day fulfillment out of competitive necessity, we think Amazon remains in a solid position, with US retail growth likely above industry growth rates (indicating continued share gains). We still think the stock set up could benefit after 4Q guidance is provided (potentially removing an overhang), when Street can likely start looking forward to more normal growth comps in 2022,” BofA said.

Bank of America reiterated its Buy rating and lowered its price target to $4,250 from $4,300.

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Amazon sees $148 billion in market value wiped out after sales outlook misses forecasts

Amazon prime delivery
Amazon missed sales estimates in the second quarter.

  • Amazon fell as much as 8.1% in early trading, wiping $148 billion off the company’s market value.
  • Investors were disappointed after revenues missed estimates and Amazon forecast lower-than-expected sales.
  • Yet Amazon’s profit still jumped 50% year-on-year, and its cloud computing division outperformed.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Amazon lost $148 billion of market value on Friday in early trading after the e-commerce giant forecast lower-than-expected sales in the third quarter and missed revenue estimates for the first time since 2018.

Shares in the company dropped as much as 8.1% on the Nasdaq exchange on Friday. That took Amazon’s market capitalization – the value of all its shares combined – to $1.67 trillion, $148 billion lower than at Thursday’s close.

Amazon then pared losses to stand 7.02% lower at $3,351.86 by 10.13 a.m. ET. The drop helped drag down the Nasdaq 100 index by 0.5%.

The online retailer published second-quarter earnings after the bell on Thursday, showing that sales jumped 27% year-on-year to $113 billion. But investors were left underwhelmed, as analysts had predicted a rise in sales to around $115 billion.

The market was also disappointed by Amazon’s sales forecast for the third quarter, which came in below expectations. Amazon said operating profit would be between $2.5 billion and $6 billion, compared with $6.2 billion in the third quarter of 2020.

Amazon’s lower-than-expected sales and forecasts were in large part down to people choosing to do less online shopping as the coronavirus pandemic eased, chief financial officer Brian Olsavsky told analysts. The retailer was one of the major beneficiaries in the outbreak of COVID-19, as people went online to buy essentials and gadgets while locked down at home.

Read more: Baird’s top tech strategist says opportunities in the space are limited amid supply chain issues and dot-com-era valuations – and details 3 strategies investors can use to reposition away from risky tech

The second-quarter results were still astounding by most standards, but Amazon’s stock price has become a victim of the company’s success, said Nicholas Hyett, equity analyst at broker Hargreaves Lansdown.

“It’s saying something when you can report quarterly sales roughly equal to the annual GDP of Ukraine and 33% operating profit growth and still disappoint the market,” he said.

Amazon’s operating profit rose 33% year-on-year to $7.7 billion in the second quarter. Its net profit jumped 50% to $7.8 billion, beating expectations, as did revenues at the Amazon Web Services cloud division.

Read the original article on Business Insider

US stocks slip as weak Amazon sales forecast clouds the outlook for tech giants

Stock Market Bubble
A trader blows bubble gum during the opening bell at the New York Stock Exchange (NYSE) on August 1, 2019, in New York City.

US stocks slipped Friday as a weak sales forecast from Amazon clouds the outlook for technology stocks.

On Thursday after the market close, Amazon’s quarterly earnings fell short of expectations, as the Seattle-based firm missed quarterly sales estimates for the first time since 2018. Its sales and profit forecasts were below expectations, further worrying investors about the economic outlook. Shares of the ecommerce giant slipped about 7% at the opening bell.

Tech giants have been some of the pandemic’s biggest winners. However, Amazon’s latest report underscores the challenge of keeping the strong pace of sales as the economy reopens.

“Consumers’ online shopping levels are returning normal as they shift some spending to other entertainment sources and offline shopping,” Dan Romanoff, equity analyst at Morningstar, said in a note. “We see no cracks in the long-term story as Amazon remains well-positioned to prosper from the secular shift toward e-commerce and the public cloud over the next decade.”

Here’s where US indexes stood shortly after the 9:30 a.m. ET open on Friday:

US stocks in recent weeks have climbed mostly higher as investors cheered robust corporate earnings and the accelerating pace of global economic recovery. The COVID-19 Delta variant, along with inflationary concerns, have dampened the positive sentiment.

Still, the benchmark S&P 500 is on track to close out a sixth straight month of gains.

The yield on the 10-year Treasury note was 1.251%, down by 1.8 basis points.

The Personal Consumption Expenditures price index – a closely monitored measure of nationwide inflation – gained 0.5% last month, suggesting that prices continued to climb amid supply chain issues across the US.

The reading exceeded the median estimate of a 0.4% increase from economists surveyed by Bloomberg. It also matched the May print of 0.5% growth.

Oil prices were mixed. West Texas Intermediate crude slipped 0.16%, to $73.50 per barrel. Brent crude, oil’s international benchmark, increased 0.9%, to $76.12 per barrel.

Gold slipped 0.41% to $1,823.04 per ounce.

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Amazon tumbles close to 7% premarket, after missing sales estimates for the first time since 2018 as the pandemic boom cooled

Amazon prime delivery
Amazon missed sales estimates in the second quarter.

  • Amazon’s stock fell 6.5% in premarket trade after it missed quarterly sales estimates for the first time since 2018.
  • The online retailer’s Q2 earnings report gave sales and profit forecasts that underwhelmed investors.
  • Nonetheless, Amazon still posted a 50% jump in profit Thursday, and its cloud division beat expectations.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Amazon‘s stock price fell 6.5% in premarket trading to $3,365 after it missed quarterly sales estimates for the first time since 2018 in its second-quarter earnings, as the pandemic-driven online spending frenzy cooled.

The e-commerce giant’s revenues jumped 27% year-on-year to $113 billion, its earnings report released after the market closed Thursday showed. But investors were left underwhelmed, as analysts had predicted a rise in sales to around $115 billion.

The market was also reacting to Amazon’s prediction that third-quarter revenue would come in slightly lower than analysts had been anticipating. It also said operating profit would be between $2.5 billion and $6 billion, compared with $6.2 billion in the third quarter of 2020.

Amazon’s lower-than-expected sales were in large part down to people choosing to shop online less as the coronavirus pandemic eased, the company’s chief financial officer, Brian Olsavsky, told analysts. The retailer was one of the major beneficiaries in the outbreak of COVID-19, as people went online to buy essentials and gadgets while locked down at home.

Read more: Baird’s top tech strategist says opportunities in the space are limited amid supply chain issues and dot-com-era valuations – and details 3 strategies investors can use to reposition away from risky tech

The second-quarter results were still astounding by most standards, but Amazon’s stock price has become a victim of the company’s success, said Nicholas Hyett, equity analyst at broker Hargreaves Lansdown.

“It’s saying something when you can report quarterly sales roughly equal to the annual GDP of Ukraine and 33% operating profit growth and still disappoint the market. You can see why Jeff Bezos would rather be jetting off into space,” he said.

Amazon’s operating profit rose 33% year-on-year to $7.7 billion in the second quarter. Its net profit jumped 50% to $7.8 billion, beating expectations, as did revenues at the Amazon Web Services cloud division.

Futures for the tech-heavy Nasdaq 100 were down 0.99% on Friday, in part because of investor reaction to Amazon’s earnings. Lower-than-expected second-quarter GDP figures and rising coronavirus cases also unnerved traders.

Read the original article on Business Insider

Amazon tumbles 7% premarket, after missing sales estimates for the first time since 2018 as the pandemic boom cooled

Amazon prime delivery stock
Amazon missed sales estimates in its Q2 earnings.

  • Amazon’s stock fell 7% in premarket trade after it missed quarterly sales estimates for the first time since 2018.
  • The online retailer’s Q2 earnings report gave sales and profit forecasts that underwhelmed investors.
  • Nonetheless, Amazon still posted a 50% jump in profit Thursday, and its cloud division beat expectations.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Amazon‘s stock price fell 6.7% to $3,358 in premarket trading after it missed quarterly sales estimates for the first time since 2018 in its second-quarter earnings, as economies reopened and the pandemic-linked online spending frenzy cooled.

The e-commerce giant’s revenues jumped 27% year-on-year to $113 billion, its earnings report released after the market closed Thursday showed. But investors were left underwhelmed, as analysts had predicted a rise in sales to around $115 billion.

The market was also reacting to Amazon’s prediction that third-quarter revenue would come in slightly lower than analysts had been anticipating. It also said operating profit would be between $2.5 billion and $6 billion, compared with $6.2 billion in the third quarter of 2020.

The US company’s lower-than-expected sales were in large part down to people choosing to shop online less as the coronavirus pandemic eased, the company’s chief financial officer, Brian Olsavsky, told analysts. The retailer was one of the major beneficiaries in the outbreak of COVID-19, as people went online to buy essentials and gadgets while locked down at home.

Read more: Baird’s top tech strategist says opportunities in the space are limited amid supply chain issues and dot-com-era valuations – and details 3 strategies investors can use to reposition away from risky tech

The second-quarter results were still astounding by most standards, but Amazon’s stock price has become a victim of the company’s success, said Nicholas Hyett, equity analyst at broker Hargreaves Lansdown.

“It’s saying something when you can report quarterly sales roughly equal to the annual GDP of Ukraine and 33% operating profit growth and still disappoint the market. You can see why Jeff Bezos would rather be jetting off into space,” he said.

Amazon’s operating profit rose 33% year-on-year to $7.7 billion in the second quarter. Its net profit jumped 50% to $7.8 billion, beating expectations, as did revenues at the Amazon Web Services cloud division.

Read the original article on Business Insider

Amazon says Jeff Bezos will be involved in ‘one-way door’ decisions in his new role – here’s what that means

Jeff bezos
Amazon founder Jeff Bezos.

  • Jeff Bezos will spend his time as Amazon executive chairman focusing on “one-way door” decisions.
  • Bezos defines these as big decisions that can’t be taken back — like walking through a one-way door.
  • Bezos will hand over day-to-day management of Amazon to AWS CEO Andy Jassy.
  • Visit the Business section of Insider for more stories.

Jeff Bezos may be stepping down as Amazon CEO, but he’s not going anywhere – in fact, he’ll still be involved in major, “one-way door” decisions at the company. 

Bezos, 57, announced on Tuesday that in the third quarter of 2021, he’ll move into a new role as executive chairman of Amazon’s board. Andy Jassy, the current CEO of AWS, will take his place. 

“Being the CEO of Amazon is a deep responsibility, and it’s consuming. When you have a responsibility like that, it’s hard to put attention on anything else,” Bezos wrote, adding that he’ll be focusing his time on his philanthropy, as well as the two companies he owns: the Washington Post and space company Blue Origin. 

Read more: Andy Jassy will be the next CEO of Amazon. Insiders dish on what it’s like to work for Jeff Bezos’ successor who built AWS into a $40 billion business.

But Bezos said that while he’s handing over day-to-day management of the company to Jassy, he’ll still be “engaged in important Amazon initiatives,” a sentiment Amazon executives echoed during a conference call following the company’s fourth-quarter earnings report on Tuesday. 

“Jeff is not leaving, he is getting a new job,” Brian Olsavsky, Amazon’s chief financial officer, said during the call. 

“He will be involved in many large ‘one-way-door’ issues, as we say – ‘one way doors’ meaning the more important decisions, things like acquisitions, things like strategies, going into grocery and other things,” Olsavsky said. “So, Jeff’s always been involved with that and that’s where he’ll keep his time focused in his new role.”

Olsavsky added that Amazon is “very happy to see both Jeff and Andy get new perspectives” and that Jassy will have the opportunity to put his imprint on Amazon. 

Bezos has spoken in the past about “one-way-door” decisions. In his annual letter to shareholders in both 1997 and 2016, Bezos described his method of distinguishing between two kinds of decisions.

One type, he wrote, is like walking through a standard door: If you’re not happy with your choice, you can always walk back through it. The other type is a one-way door – it’s not reversible, so you have to be very careful about making that kind of decision, he wrote. 

But Bezos has also warned others against making too many “one-way-door” decisions.

“The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention,” Bezos wrote in 1997. “We’ll have to figure out how to fight that tendency.”

Read the original article on Business Insider