- Amazon (NASDAQ:AMZN) is scheduled to announce Q2 earnings results on Thursday, July 28th, after market close.
- The consensus EPS Estimate is $0.12 (-84.5% Y/Y), the first ever drop in over seven years and the consensus Revenue Estimate is $119.16B (+5.4% Y/Y); this marks the slowest growth rate in 20 years.
- Over the last 1 year, AMZN has beaten EPS estimates 75% of the time and has beaten revenue estimates 100% of the time.
- Over the last 3 months, EPS estimates have seen 0 upward revisions and 31 downward. Revenue estimates have seen 2 upward revisions and 37 downward.
- What industry reactions indicate?
- While online sales at Marketplace is seen reporting a drop, subscription business is expected to see growth in sales wherein Prime is more valuable to consumers; AWS is seen being the major driver to contribute to Amazon’s Q2 growth.
- The company announced the general availability of AWS IoT TwinMaker, AWS Amplify Studio, Amazon Aurora Serverless v2, AWS Mainframe Modernization, and Graviton3 processor-backed Amazon Elastic Compute Cloud C7g instances; AWS was also picked by Boeing as the strategic cloud provider.
- Slowdown in online shopping activities, ongoing inflationary pressure, elevated staffing costs and supply-chain disruptions are likely to have been concerning.
- What analysts suggest?
- Mizuho Securities analyst indicate that Amazon.com’s cloud service business could be under pressure amid rising recession fears; major IT service firms have planned to reduce spending and offer discounts to gain share in the low-end of the market.
- Analyst added, "At the same time, our checks indicate that AWS is considering a discount of up to 10% in September/October for new contracts/renewals when IT budgets are set for FY23."
- Investors will be closely watching Amazon Web Services sales numbers to judge the company's future outlook and upcoming steps.
- Oppenheimer analyst Jason Helfstein says, "We are conservatively reducing second-half e-commerce estimates assuming consumer spending slows after stable summer trends."; he remains a long-term bull on the stock.
- Of the 53 Wall Street Analysts covering the stock, 36 have assigned a Strong Buy and 14 rated it a Buy.
- Of the 24 SA Author's Rating who covered the stock in past 30 days, the stock has a Buy from 9 analysts and 7 have a Hold and 4 rate it Strong Buy.
What the company believes?
In Q2, the company launched a Prime benefit called Buy with Prime, which allows Prime members in U.S. to shop directly from merchants’ online stores and avail of fast and free delivery service; this could have led to higher Prime subscriptions.
The company's focus on grocery retail is also likely to have boosted its Q2 performance; rising number of Amazon Fresh grocery stores, 4-star stores and Amazon Go outlets across U.S. have also supported Q2 sales.