Markets were rosy in the trading session but declined after-hours, with Amazon leading the fall given a less robust guidance and earnings report. This is on top of Facebook lacklustre guidance the day before.
So let’s into the action.
AMZN: The Giant Missed Expectation
The e-commerce titan fell sharply in after-hours as it reported mixed results. In contrast, profits were significant, the sales drop below expectation.
The miss lies in Amazon’s e-commerce business which is the heart of the company. It had suffered a pretty hard deceleration in this growing trend. However, this is slightly compensated by the rosy cloud computing business and its advertising segment coupled with the third-party seller segments.
The Figures that Matters
Sales came in at $113.1 billion, which is an increase of 27% from the year-ago, and that lies in the middle of its guidance. However, it is still shy of Wall Street’s estimate of $115.4 billion.
Profit per share hits $15.12 ahead of analyst’s $12.28 forecast. Operating income was good as it reaches $7.7 billion, which is at the upper end of the company’s guidance of $4.5 billion to $8 billion. However, Wall Street’s had a high benchmark of $7.8 billion.
Online Stores
As we dive into the core business, we can see its sales for the online stores by 16% from the previous year to $53.2 billion. However, while it remains on the growth trajectory, it still fell short of estimates at $57.3 billion.
The growth of 16% appeared pale compared to the 41% growth seen in the March quarter and 49% a year ago. So that could be the rate of change that is moderating in its core business.
Third-Party Services and Web Services
The segment saw revenue up by 38% to hit $25.1 billion, marginally above the consensus level of $24.8 billion. However, the growth of 38% is still weaker than the 60% seen in the March quarter and 53% in the prior year.
The web service segment, a rising star of the business, saw a revenue of $14.8 billion which is ahead of the estimate at $14.3 billion. The growth is 37%, and that is an acceleration from 32% seen in the March quarter and 29% a year ago. So that’s the bright spot in the result.
Advertising Revenue
The “Other” revenue segment, which mainly encompasses the advertising business, was a pretty firm result. Revenue was $7.9 billion, an increase of a stunning 87%, and hit above estimates of $7 billion. This set of results is consistent with other Ads giants of Facebook and Alphabet.
It was a tough day for Amazon as investors had expected them to exceed expectations on all fronts. But, as with other companies, the pandemic had brought many uncertainty and variables to the result, with Apple facing difficulty guiding its trajectory too.
Can Nasdaq continues its rise? Stay tuned as we give the latest market trend and update.
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