Amazon revenue to swell again but aggressive expansion to knock profits in Q3 – Stock Market News

Like most online-focused companies during the pandemic, Amazon enjoyed a sales boom in 2020. That boom continued into the first half of 2021. But as the bonfire of monetary and fiscal stimulus fizzled out in the second half, so did the exponential growth in revenue. Nevertheless, the company has been able to maintain a respectable pace of revenue growth over the last year, thanks to the strong performance of its cloud unit as well as the rising share of income from digital advertising and subscription services.
The cloud business - Amazon Web Services (AWS) – will likely see revenue rising by at least 30% year-on-year, while advertising revenue is expected to jump by more than 35% y/y. But the third quarter was likely a good one for its core e-commerce unit too following the company’s most successful Prime Day event ever in July, which should make up for the poor Q2.
Total revenue for the quarter is therefore expected to come in at $127.66 billion according to IBES estimates by Refinitiv, representing an annual increase of 15.2%. This compares with $121.23 billion in Q2 when yearly growth slowed to 7.2%.

However, the expected bounce in the retail business in Q3 might not last very long. Amazon decided to hold a second Prime Day event in October, calling it Prime Early Access. However, sales were reportedly lower than the July event and the contribution to Q4 revenue will become clearer after the Black Friday sale, as it’s likely many customers simply brought forward their holiday shopping.
Even if the Early Access sale provides an incremental boost to Q4 earnings, the 2022 holiday season will still be a tough trading period amidst the squeeze on consumers from higher energy bills and soaring prices. If predictions about a recession in America next year materialize, the outlook for the retail segment is quite bleak.
Higher spending and costs have hit profitsMaking matters worse is the increased competition from the likes of Walmart even as Amazon struggles with spiralling costs. The company has been feeling the pressure from higher wages lately, being forced to offer higher wage deals to settle labour disputes as well as to retain staff amid shortages. Surging shipping costs and ongoing supply issues are also weighing on the retailer.
However, the retail business has always been operating with razor-thin margins and Amazon’s biggest source of profit for some time now has been AWS. On the face of it, this is not immediately visible, especially since Q1 this year when the company slipped into losses. Profitability is expected to have improved in the third quarter, with a net income estimate of $2.3 billion versus a $2.0 billion loss in the prior quarter, although this would still be down about 27% from a year ago. In terms of earnings per share (EPS), it’s estimated at $0.22 for the period.
But the drag from the e-commerce operations doesn’t completely justify the weak EPS performance relative to the stellar revenue growth and this discrepancy is better explained by Amazon’s recent investment splurge. The company has been busy lately investing heavily in new cloud infrastructure. Investors have long been optimistic about AWS’ longer-term prospects, believing it has the edge over the competition, not to mention being the most profitable. Even now with AWS at the top of its field, the latest round of heavy spending could accelerate its growth much further in the future.
The most expensive tech stockThe question is though, does this make a strong enough case for Amazon’s exorbitant valuation. The stock has lost more than 30% of its value this year and is down about 38% from its all-time high of $188.65 reached in July 2021. Yet, compared to its peers, it’s by far the most expensive with a trailing price/earnings (PE) ratio of about 160. Its forward multiples aren’t much better and still way above those of other tech behemoths.

But analysts remain bullish about Amazon, maintaining their ‘buy’ recommendation and assigning a median price target of $170.00. That’s a level last brushed in March 2022 and the share price has since fallen significantly. If the earnings results don’t disappoint and the company’s guidance for Q4 impresses, the stock might be able to rally towards its 50-day moving average (MA) in the $125 region. Strong gains could extend any rebound towards the August peak of $146.57.
Can the stock hold above $100?
However, if Amazon’s results don’t reach the bar set by investors and its guidance isn’t very encouraging either, the stock could fall back towards the recent low of $105.35. In the worst case scenario, the price could breach $100, after which the $90.55 and $84 levels would come into scope, which correspond with the 123.6% and 138.2% Fibonacci extensions of the May-August uptrend.
As a general note, Amazon’s preference to focus on expansion and diversification rather than prioritizing profits is nothing new and this approach has worked in the past in catapulting the share price higher. But as financial conditions tighten and investors are forced to become pickier, Amazon might struggle to sustain its current valuation without having more to show for it.تازہ ترين خبريں
دستبرداری: XM Group کے ادارے ہماری آن لائن تجارت کی سہولت تک صرف عملدرآمد کی خدمت اور رسائی مہیا کرتے ہیں، کسی شخص کو ویب سائٹ پر یا اس کے ذریعے دستیاب کانٹینٹ کو دیکھنے اور/یا استعمال کرنے کی اجازت دیتا ہے، اس پر تبدیل یا توسیع کا ارادہ نہیں ہے ، اور نہ ہی یہ تبدیل ہوتا ہے یا اس پر وسعت کریں۔ اس طرح کی رسائی اور استعمال ہمیشہ مشروط ہوتا ہے: (i) شرائط و ضوابط؛ (ii) خطرہ انتباہات؛ اور (iii) مکمل دستبرداری۔ لہذا اس طرح کے مواد کو عام معلومات سے زیادہ کے طور پر فراہم کیا جاتا ہے۔ خاص طور پر، براہ کرم آگاہ رہیں کہ ہماری آن لائن تجارت کی سہولت کے مندرجات نہ تو کوئی درخواست ہے، اور نہ ہی فنانشل مارکیٹ میں کوئی لین دین داخل کرنے کی پیش کش ہے۔ کسی بھی فنانشل مارکیٹ میں تجارت میں آپ کے سرمائے کے لئے ایک خاص سطح کا خطرہ ہوتا ہے۔
ہماری آن لائن تجارتی سہولت پر شائع ہونے والے تمام مٹیریل کا مقصد صرف تعلیمی/معلوماتی مقاصد کے لئے ہے، اور اس میں شامل نہیں ہے — اور نہ ہی اسے فنانشل، سرمایہ کاری ٹیکس یا تجارتی مشورے اور سفارشات؛ یا ہماری تجارتی قیمتوں کا ریکارڈ؛ یا کسی بھی فنانشل انسٹرومنٹ میں لین دین کی پیشکش؛ یا اسکے لئے مانگ؛ یا غیر متنازعہ مالی تشہیرات پر مشتمل سمجھا جانا چاہئے۔
کوئی تھرڈ پارٹی کانٹینٹ، نیز XM کے ذریعہ تیار کردہ کانٹینٹ، جیسے: راۓ، خبریں، تحقیق، تجزیہ، قیمتیں اور دیگر معلومات یا اس ویب سائٹ پر مشتمل تھرڈ پارٹی کے سائٹس کے لنکس کو "جیسے ہے" کی بنیاد پر فراہم کیا جاتا ہے، عام مارکیٹ کی تفسیر کے طور پر، اور سرمایہ کاری کے مشورے کو تشکیل نہ دیں۔ اس حد تک کہ کسی بھی کانٹینٹ کو سرمایہ کاری کی تحقیقات کے طور پر سمجھا جاتا ہے، آپ کو نوٹ کرنا اور قبول کرنا ہوگا کہ یہ کانٹینٹ سرمایہ کاری کی تحقیق کی آزادی کو فروغ دینے کے لئے ڈیزائن کردہ قانونی تقاضوں کے مطابق نہیں ہے اور تیار نہیں کیا گیا ہے، اسی طرح، اس پر غور کیا جائے گا بطور متعلقہ قوانین اور ضوابط کے تحت مارکیٹنگ مواصلات۔ براہ کرم یقینی بنائیں کہ آپ غیر آزاد سرمایہ کاری سے متعلق ہماری اطلاع کو پڑھ اور سمجھ چکے ہیں۔ مذکورہ بالا معلومات کے بارے میں تحقیق اور رسک وارننگ ، جس تک رسائی یہاں حاصل کی جا سکتی ہے۔