Amazon shares slide after disappointing earnings
Amazon boss Andy Jassy
F. Carter Smith | Bloomberg | Getty Images
Amazon’s shares closed 7.5% on Friday after the company reported disappointing second quarter results on Thursday and weak forecasts for the current quarter, suggesting recent pandemic momentum is slowing.
Amazon warned it expects slower growth in the next few quarters as it skips tough year-on-year comparisons with its business during the Covid-19 lockdowns.
Many consumers avoided physical stores to prevent the virus from spreading and flocked to digital retailers like Amazon to purchase both essential and non-essential goods during the pandemic. In recent months the economy has opened further, pushing some shoppers back into stores while also spending more on travel and other services.
Investors admitted that slower growth will put pressure on Amazon stock in the short term, but several analysts said they remain confident that e-commerce as a whole will continue to grow, which benefits Amazon.
“AMZN has reported receipts and [operating income] that were 2% and 1% below consensus and led the third quarter down, “Barclays analyst Ross Sandler wrote in a customer note on Friday that the pandemic rise is challenging for many companies and despite the slowdown, AMZN continues to attract top-tier members and gaining e-commerce stake. Those pressures won’t derail the long-term bull case [Amazon Web Services] and retail, but likely means we’re bound by reach for the next several months until a catalyst shows up. “
In a separate communication to customers, Baird’s analysts wrote: “We never like to see a miss.” However, they pointed to above-average results in other, more profitable segments of Amazon such as advertising, cloud computing and subscription services as the “more notable” standout in the company’s profits.
“This is the quasi-recurring model that we have highlighted deserves a higher multiple,” said Baird analyst Colin Sebastian.
Amazon shares are up more than 3% since the start of the year. The S&P 500 is up around 18.6% over the same period.