Amazon shares rebound after strong second quarter and forecast
Andy Jassy, CEO of Amazon.Com Inc., at the GeekWire Summit in Seattle, Washington, USA on Tuesday, October 5, 2021.
david ryder | Bloomberg | Getty Images
Amazon shares jumped more than 12% on Friday, a day after the company reported stronger-than-expected second-quarter revenue and issued an upbeat outlook.
Sales for the three months ending June rose 7% to $121.23 billion, which was above the $119.09 billion expected by Wall Street. This is Amazon’s third consecutive quarter of single-digit revenue growth.
Amazon’s forecast for the third quarter suggests that growth could pick up again, between 13% and 17%. The company said it expects revenue this quarter of $125 billion to $130 billion, while analysts expected sales of $126.4 billion, according to Refinitiv.
Amazon and Apple announced upbeat results in an otherwise dismal earnings season for tech companies. Facebook’s parent companies Meta, Alphabet and Microsoft all posted disappointing results for the quarter as decades-high inflation, rising interest rates and other macroeconomic pressures weighed on their businesses.
Wall Street applauded Amazon’s earnings report, with one analyst calling the e-commerce giant a “port in the macro storm” as it appears to be weathering many headwinds so far that are challenging its tech peers.
“Overall, Amazon provided investors with very strong Q2 earnings amid extreme macro-related earnings volatility across technology,” Deutsche Bank analysts wrote on Friday. led by Lee Horowitz in a note to clients. The company, which maintains a buy rating on Amazon shares, raised its price target to $175 from $155.
Several analysts said the results indicated Amazon was making progress on the cost headwinds that have pressured the company in recent quarters. Amazon has faced high labor, supply chain, energy and transportation costs, as well as the Covid-19 pandemic, among other factors. CEO Andy Jassy said Thursday that the company continues to work on “the most controllable costs.”
“With a successful 2-day Prime Day event in July and management [management] discussing end demand issues across its core businesses, we believe Amazon is well positioned to deliver a strong revenue growth narrative in 2H’22 [the second half of 2022]Goldman Sachs analysts, led by Eric Sheridan, said in a research note Friday. The company maintained its buy rating on the stock.
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