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Amazon Long

by SignalFactory   ·  February 1, 2021 | 12:50:56 UTC  

Amazon Long

by SignalFactory   ·  February 1, 2021 | 12:50:56 UTC  

Amazon is scheduled to report fourth-quarter 2020 results on Feb 2.

For the fourth quarter, the company expects net sales between $112 billion and $121 billion. The figure is anticipated to improve 28-38% on a year-over-year basis.

The Zacks Consensus Estimate for fourth-quarter net sales is pegged at $120.4 billion, suggesting growth of 37.6% from the prior-year quarter’s reported figure.

Further, the Zacks Consensus Estimate for fourth-quarter earnings currently stands at $7.00 per share which suggests an improvement of 8.2% from the year-ago reported figure.

Prime, Holiday Sales & Retail Initiatives, Key Catalysts for Q4:

Amazon Prime’s strengthening grocery and delivery services, expanding international footprint, and original content portfolio growing retail initiatives are expected to have aided its adoption rate in the fourth quarter. Further, Prime-based customer benefits are likely to have remained positives.

Furthermore, the company experienced record-breaking sales in its Prime Day event, which took place between Oct 13 and Oct 14. This implies solid Prime momentum that Amazon faced during the quarter review.

Also, the company witnessed solid momentum among third-party sellers, especially small and medium businesses (SMBs) during the same event. Sales generated by these sellers exceeded $3.5 billion during the event, surging around 60% year over year.

Robust Prime Day sales along with strong momentum among customers as well as sellers are likely to have boosted Amazon’s performance in the holiday quarter, which is crucial for its annual sales figure.

Concerning holiday initiatives, the company’s return, and refund flexibilities, which provide a hassle-free and seamless return experience for holiday shopping, are anticipated to have driven its customer momentum further. Moreover, the extension of the return window for purchases made between Oct 1, 2020, and Dec 31, 2020, till Jan 31, 2021, is expected to have remained positive.

Apart from this, Amazon’s initiative to provide better safety of the delivered orders, with the option of Key In-Garage Delivery, is likely to have provided a better holiday shopping experience during the pandemic.

Notably, the company, which has been anyway witnessing increasing shopping orders during the pandemic as online retail has become an integral part of the new normal, gained solid momentum during the recent holiday season, owing to the above-mentioned endeavors. Reportedly, this holiday shopping season was the biggest in the company’s history.

This is likely to have driven its top-line growth significantly in the to-be-reported quarter.

In addition to the Prime program and holiday initiatives, the impacts of amazon’s aggressive stance on the core retail industry, especially grocery retail, is expected to get reflected in its fourth-quarter results.

Further, the company unveiled its online store for prescription medicines namely Amazon Pharmacy in integration with its PillPack buyout.

AWS Portfolio Strength to Consider:

The impacts of the company’s expanding Amazon Web Services (“AWS”) portfolio are expected to get reflected in the fourth-quarter results.

In the fourth quarter, AWS rolled out a cloud-based healthcare service called Amazon HealthLake. Further, it unveiled Amazon DevOps Guru, which improves application availability by using ML services.

Additionally, the company rolled out five industrial ML services namely, Amazon Monitor, Amazon Lookout for Equipment, the AWS Panorama Appliance, the AWS Panorama SDK, and Amazon Lookout for Vision.

Further, AWS recently made Amazon Managed Workflows for Apache Airflow (“MWAA”) generally available. Notably, the service offers availability, security, and improved scalability to customers, while managing their workflows using Apache Airflow.

Furthermore, the company announced the general availability of AWS Network Firewall, which is a new service, well-equipped to protect against common network threats such as intrusion prevention and detection, dynamic packet filtering, and web filtering.

Also, AWS made its new visual data preparation tool called AWS Glue DataBrew and new EC2 capability— AWS Nitro Enclaves — generally available.

The expectations are that all these initiatives have helped Amazon in winning customers. This, in turn, is expected to have driven AWS’s fourth-quarter revenues.

Robust Smart Devices Portfolio:

During fourth-quarter 2020, Amazon rolled out eero for Service Providers in a bid to bolster Wi-Fi device offerings.

Notably, eero for Service Providers is a hardware and software offering that combines actionable insights, advanced security measures, and whole-home mesh Wi-Fi systems in real-time. This launch is expected to have driven the company’s momentum across internet service providers in the to-be-reported quarter.

Further, the company’s robust portfolio of Echo smart speakers is expected to have contributed to the fourth-quarter performance. Additionally, strengthening Alexa features are likely to have aided Amazon in delivering a better user experience, which, in turn, is expected to get reflected in the company’s fourth-quarter results.

Amazon Long (Buy)

ENTER AT: 3264.45

T.P_1: 3566.29

T.P_2: 3904.24

T.P_3: 4178.30

T.P_4: 4350

S.L: 2893.38

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