Amazon Delivers Mixed Bag in Q2, Pop Share 13%


Amazon (AMZN) provided mixed results for the second quarter, which ended June 30, 2022. The e-commerce giant posted revenue above consensus estimates. However, profits missed the same. Following the second quarter results, AMZN shares rose more than 13% during extended trading hours.

Q2 benefits Instantaneous

Net revenue for the quarter increased 7% to $121.2 billion from the prior year quarter. The figure exceeded consensus estimates of $119.18 billion. Amazon Web Services revenue increased to $19.74 billion from $14.81 billion in the year-ago quarter.

Amazon reported a loss per share of $0.20 compared to earnings per share of $0.76 in the year-ago quarter. The figure missed expected earnings per share by $0.12. The loss came as the company struggled with inflationary pressures in the quarter that triggered higher costs. Cost of sales increased to $66.42 billion from $64.18 billion in the prior year quarter.

Other key measures

Operating profit for the quarter fell to $3.3 billion from $7.7 billion in the year-ago quarter. Cash, cash equivalents and restricted cash increased to $36.6 billion from $34.16 billion a year ago.

Interestingly, Prime members purchased over 300 million items during the Prime Day event. It was the largest Prime Day event for Amazon Business Partners, with 100,000 items purchased per minute.

Guidelines Rosy Q3 2022

Amazon expects third-quarter 2022 net sales to be between $125 billion and $130 billion, up 13% to 17% from the year-ago quarter. The company also expects a 3.9% unfavorable impact from foreign exchange. Operating profit is expected to be between $0 billion and $3.5 billion, compared to $4.9 billion in the year-ago quarter.

Management comment

Chief Executive Officer (CEO) Andy Jassy said: “We are also seeing an acceleration in revenue as we continue to make Prime even better for members, both by investing in faster shipping speeds and adding benefits features such as free shipping from Grubhub for a year, exclusive access to NFL Thursday Night Football games starting September 15, and the release of the highly anticipated Lord of the Rings: The Rings of Power series on September 2 .

Wall Street is bullish on Amazon

The Street is bullish on Amazon stocks, with a Strong Buy consensus rating, based on 34 buys and one hold. Amazon’s average price target of $171.67 implies upside potential of 40.4% from current levels.

Website traffic shows mixed trends

TipRanks’ website traffic tool, which uses data from SEMrush Holdings (SEMR), the world’s largest website usage monitoring service, offers insight into Amazon’s performance this quarter.

According to the tool, Amazon’s site saw a slight 0.37% drop in global visits to 836.5 million in June 2022 compared to the previous May. However, year-to-date traffic to Amazon’s website has increased by 1.86% compared to the same period last year.

Find out how Website Traffic can help you find your favorite stocks.

Key takeaway for investors

Amazon’s second-quarter revenue growth and strong guidance for the third quarter of 2022 are reassuring as they come amid mounting inflationary pressures. However, it is the rate of decline in earnings that should be of concern.

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