Amazon (NASDAQ: AMZN) is experiencing significant disruptions as a result of the COVID-19 pandemic. While it appeared as though the outbreak was subsiding, recent surges in states such as Florida, Texas, and California are putting that into doubt.
What’s more, the $600-per-week increase in unemployment benefits expires at the end of July, potentially leaving the 25 million Americans who rely on the payments on a fiscal cliff. The resulting decrease in disposable income may reduce spending on Amazon. The increasing level of uncertainty will make Thursday’s earnings release an especially interesting one.
Will Amazon deliver what shareholders want this quarter?
One of the most crucial elements of the report will be the sales figure. Stay-at-home mandates created a surge in sales for Amazon as it benefited from people looking to the e-commerce giant for their essential needs. Net sales increased 26% in its fiscal first quarter to $76 billion. The company is expecting the boost in revenue will continue — rising between 18% and 28% when it releases its second-quarter results.
It will also be vital for investors to consider expenses. Fulfilling the significant increase in orders will be no easy task. Amazon CEO Jeff Bezos highlighted how difficult it would be in a company press release at the end of April.
Moreover, it will be interesting to see if the company provides any updates on its Amazon Prime member totals. The most recent update was in January when the company announced it reached the 150-million member milestone. As of the end of 2019, 65% of shoppers were Prime members. Given the number of people who are turning to Amazon to reduce trips to stores, it would not be surprising for Amazon to announce a significant increase in Prime members.
Finally, investors should look at the update in its Amazon Web Services (AWS) segment. That’s because even though the segment generated 13.5% of revenue in its most recent quarter, it made up 77% of total operating profit. With many retailers accelerating digital transformations, AWS may have experienced an increase in sales as a result.
What did this mean for investors?
The uncertainty in business activity as a result of COVID-19 makes these earnings report an important one. In normal times, most companies come pretty come to hitting their earnings estimates. However, these are anything but normal times, which could be one reason Amazon gave such a broad range in its revenue forecast.
The only thing that appears to be certain is volatility. Shareholders and potential investors in Amazon’s stock should prepare for a higher-than-usual movement in the share price following the earnings release on Thursday.
All information on this website is of a general nature. The information is not adapted to conditions that are specific to your person or entity. The information provided can not be considered as personal, professional or legal advice or investment advice to the user.
Signal Factory is not represented as a registered investment consultant or brokerage dealer nor offers to buy or sell any of the financial instruments mentioned in the service offered.
While Signal Factory believes that the content provided is accurate, there are no explicit or implied warranties of accuracy. The information provided is believed to be reliable; Signal Factory does not guarantee the accuracy or completeness of the information provided. Third parties refer to Signal Factory to provide technology and information if a third party fails, and then there is a risk that the information may be delayed or not delivered at all.
All information and comments contained on this website, including but not limited to, opinions, analyzes, news, prices, research, and general, do not constitute investment advice or an invitation to buy or sell any type of instrument. Signal Factory assumes no responsibility for any loss or damage that may result, directly or indirectly, from the use or dependence on such information.
All information contained on this web site is a personal opinion or belief of the author. None of these data is a recommendation or financial advice in any sense, also within the meaning of any commercial act or law. Writers, publishers and affiliates of Signal Factory are not responsible for your trading in any way.
The information and opinions contained in the site are provided for information only and for educational reasons, should never be considered as direct or indirect advice to open a trading account and / or invest money in Forex trading with any Forex company . Signal Factory assumes no responsibility for any decisions taken by the user to create a merchant account with any of the brokers listed on this website. Anyone who decides to set up a merchant account or use the services, free of charge or paid, to any of the Forex companies mentioned on this website, bears full responsibility for their actions.
Any institution that offers a service and is listed on this website, including forex brokers, financial companies and other institutions, is present only for informational purposes. All ratings, ratings, banners, reviews, or other information found for any of the above-mentioned institutions are provided in a strictly objective manner and according to the best possible reflection of the materials on the official website of the company.
Forex trading is potentially high risk and may not be suitable for all investors. The high level of leverage can work both for and against merchants. Before each Forex investment, you should carefully consider your goals, past experience and risk level. The opinions and data contained on this site should not be considered as suggestions or advice for the sale or purchase of currency or other instruments. Past results do not show or guarantee future results.
Neither Signal Factory nor its affiliates ensure the accuracy of the content provided on this Site. You explicitly agree that viewing, visiting or using this website is at your own risk.