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Amazon Earnings: Take A Seat And Relax

May 04, 2020 6:21 PM ETAmazon.com, Inc. (AMZN)MSFT21 Comments
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Zen Analyst


  • Contrary to popular perception, Amazon is executing well and results are good.
  • Investors can count on Amazon to make the right choices.
  • Amazon will continue to benefit for quite some time as consumer shopping behavior aggressively shifts to online.

Last week was the busiest week for S&P 500 earning this quarter. If you are an active investor working at home, perhaps with young children, congratulations, you survived the onslaught.

The first quarter of the year will go down in history as an extra special earnings season because the tide just went down and we get to see who is swimming naked. Judging from Amazon's (NASDAQ:AMZN) 7.6% drop on Friday after it released earnings and the negative headlines in the media, one might conclude that Amazon reported some terrible results. Although results did not live up to the hope and dreams of the buyside, results are fine. I repeat, results are fine. Listen to Jeff Bezos and take a seat (yes, Bezos literally told investors "you may want to take a seat" in their earnings release).



Numbers are boring, but like vegetables, the professionals say they are probably necessary to ingest (in full disclosure, I don't eat vegetables - yuck). Let's go through it real quick.

Before we begin, a word of advice: don't read too much into first quarter consensus estimates for any stock because Wall Street projections are all over the place. Many are stale, many more are wild guesses. It's OK, just roll with it.

Q1 revenue came in at $75.5 billion, +26% y/y, beating the high end of guidance and beating consensus by 2%. Operating income of $4.0 billion also beat guidance, but came in 1% below consensus. Q1 was fine, investors aren't that worried about it.

Now Q2 guidance is where it gets interesting. The revenue guide is fine, bracketing consensus, but operating income was guided to $0 - zero, zilch, nada - at the mid-point. This missed consensus by $4 billion, all driven by $4 billion of spending related to COVID-19 in Q2.

This article was written by

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