‘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.

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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.

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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

Jeff Bezos shared a note from a couple that bought 2 shares of Amazon in 1997 – and are now using the proceeds to buy a house after the company’s 172,499% post-IPO run

Amazon Jeff Bezos
  • Jeff Bezos shared a note from a couple who bought two shares of Amazon in 1997 in his recent shareholder letter.
  • It’s not specified when the purchase occurred. But if the couple bought shares at the closing price on Amazon’s IPO day, it’s made 172,499%, according to data compiled by Insider.
  • Their son is now selling some of the stock to help purchase a home. The shares have grown in value to more than $80,000.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

In 1997, a couple bought two shares of a new book-selling company for their 12-year-old son. For the years following the purchase, the son wanted to cash in the stock, but the parents insisted he hold.

24 years later, that online book retailer has become one of the largest corporations in the world, and the family has seen a likely six-digit return on their investment.

The couple told their story to Jeff Bezos just as the Amazon founder was sitting down to write his final letter to shareholders as CEO.

In Bezos’ letter published Thursday, he included a copy of the letter from the couple, Mary and Larry, whose surnames were blocked out for privacy.

The letter blurred out the exact date Mary and Larry bought the shares, but detailed how they bought two shares of Amazon in 1997, because that’s all they could afford at the time. The stock split three times within the next two years, leaving the family with 24 shares.

The split-adjusted percentage increase from the close on Amazon’s IPO day to Thursday’s close is 172,449%. That means the family’s 24 shares are now worth roughly $81,098, according to data compiled by Insider.

This year, Mary and Larry’s son Ryan is buying a house and will sell some of the shares to fund the purchase. When Ryan sells the shares, he’ll need to convert the paper shares into digital before selling, Mary and Larry said.

“Those two shares have had a wonderful influence on our family,” said Mary and Larry. “We all enjoyed watching Amazon value grow year after year and it’s a story we love to tell others.”

At the end of the letter they signed: “P.S. We wished we had bought 10 shares!”

The Amazon CEO said that he’s approached with similar stories all the time.

“I know people who’ve used their Amazon money for college, for emergencies, for houses, for vacations, to start their own business, for charity – and the list goes on,” Bezos wrote. “I’m proud of the wealth we’ve created for shareowners. It’s significant, and it improves their lives.”

According to Bezos, Amazon has created $1.6 trillion of wealth for their shareowners. One of the largest beneficiaries has been Bezos himself, who owns $180 billion of Amazon and is the richest person in the world, according to Bloomberg.

Bezos said that his Amazon shares have made him wealthy, but seventh-eighths of the shares, representing $1.4 trillion of wealth creation, are owned by other investors, including pension funds, universities, 401ks, and couples like Mary and Larry.

Read more: BTIG identifies 14 beaten-down stocks poised to dominate the market this earnings season and extend their track record of crushing expectations

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Billionaire hedge fund manager David Tepper said Amazon’s stock looks attractive as it hovers near lowest point since September

David Tepper

David Tepper told CNBC’s Joe Kernen that Amazon’s stock price looks attractive after the recent mega-cap tech pullback.

Amazon is currently trading at $2,999, narrowly above last week’s five and a quarter month lows. 

The Appaloosa Management founder said Amazon’s stock now looks inexpensive, according to Kernen.  

The e-commerce giant has fallen nearly 10% in the last month as investors rotate out of mega-cap technology stocks and into names that benefit from rising yields and a recovering economy.

Tepper said he still likes Amazon and other “bellwether stocks.” He added that Amazon has permanently changed aspects of consumer behavior. For example, people are less inclined to buy products like t-shirts in retail stores if they can just shop on Amazon. 

The hedge fund manager also said it’s difficult to be bearish on stocks right now because rates have now stabilized and the $1.9 trillion pandemic relief package that was just approved by the Senate will be bullish for the stock market.

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Amazon shares dip as investors digest Jeff Bezos’ plan to step down as CEO following blockbuster Q4 earnings

Jeff Bezos

Shares in Amazon dipped on Wednesday after Jeff Bezos announced plans to step down as CEO and transition to executive chairman following a strong fourth-quarter.

The company delivered a strong beat on fourth-quarter earnings as its revenue grew 44%, topping $100 billion in a quarter for the first time. But its shares were trading around 1% lower at $3,348 per share at the market open.

AWS CEO Andy Jassy is to replace Bezos as Amazon’s CEO. Although the company may lose some of the vision of its founder, Amazon is still “very well placed for future growth disrupting more trillion dollar industries,” said Christopher Rossbach, CIO of asset management company J. Stern & Co.

The fact that the company broke records yet again this past holiday season, when its Prime delivery services were in high demand, goes to show that it’s “almost impossible” for any other retailer to match Amazon, Rossbach said. But after a defining year, it could be difficult to replicate the outsized growth it had in 2020.

Read More: Famed short-seller Carson Block says a new type of liquidity bubble is feeding the wild swings in day-trading favorites like GameStop – and warns that stocks have become a fragile ‘game’

Investors must focus on the Amazon Prime membership base, which is expected to double in market share over the next decade, helping its stock rocket higher, he said.

Further, incoming CEO Jassy’s ascension from the AWS team is seen as a positive for Amazon.

Jassy fully understands the wealth of assets across Amazon’s flywheel of operations and the move should afford Bezos more time to focus on big new bets for the company, according to Nicholas McQuire, vice president of enterprise research at CCS Insight.

“The key question will be how Jassy manages some of the inevitable bumps in the road Amazon will face with issues like anti-trust, workers’ rights and employee activism on this rise,” he said.

Separately, Wedbush raised its price target on Amazon to $4,000 from $3,900 on Wednesday and reiterated an “outperform” rating. Analysts said it wasn’t clear Bezos would actually withdraw from day-to-day oversight of the business, and expected him to continue to be integrally involved in company strategy. 

Amazon’s stock has jumped roughly 70% over the past year. But since its last reported earnings in October, the stock has seen only a 6% increase, well below the broader S&P 500’s 16% rise in the same period.

Read More: GOLDMAN SACHS: Buy these 35 stocks that are unruffled by GameStop mania and set to rally as the economic recovery gains speed

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