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Amazon Earnings: What To Expect From The Tech Giant’s Second Biggest Quarter Ever

Topline

Amazon will report earnings after the market closes Thursday, and analysts are forecasting the slew of recent blockbuster reports from big-tech giants could continue with the ecommerce juggernaut, which is expected to post its second-best quarter ever—second only to last year’s record-shattering fourth-quarter.

Key Facts

Analysts expect Seattle-based Amazon will report revenue of about $104.5 billion in the first quarter, 39% more than the $75.5 billion it pulled in the first quarter of last year.

Boosted by stimulus checks and improving sales of Amazon Web Services (AWS), net income is expected to hit $9.54 per share, or roughly $4.8 billion—soaring 90% from $2.5 billion one year ago.

Analysts universally agree that Amazon will post its second-biggest quarter ever for sales, behind only the $125.6 billion nabbed in last year’s fourth quarter thanks to a later-than-usual Prime Day and the pandemic holiday season.

As of 11:30 a.m. ET, Amazon shares are up 0.5% Thursday, lifting the stock’s year-to-date gain to about 9%—lower than the tech-heavy Nasdaq’s 11% increase.

Crucial Quote 

“Last year, Amazon lost sales to competition—including Walmart, Target, eBay and others—because it couldn’t keep up with demand, and it made a strategic decision to emphasize essentials during the start of the pandemic,” Tom Forte, a senior research analyst at investment bank D.A. Davidson said in a pre-earnings note. “Since then, it has ramped staffing and fulfillment-center square footage and, in our view, is better positioned to recapture those sales.” 

Key Background

Now worth an estimated $202 billion, Jeff Bezos started Amazon as an online bookseller operating out of his Seattle garage in 1994, and the company has since grown to become one of the world’s most valuable companies with businesses spanning cloud storage, video streaming, groceries and more. Last year, about 56% of Amazon’s $386 billion in total sales came from products sold on the platform, while the rest came from services like AWS, Amazon Prime and advertising. In February, Amazon announced Bezos would step down as CEO in the third quarter after 27 years at the company’s helm, ceding the position to AWS CEO Andy Jassy—a sign the company could double-down on its quickly growing service offerings.

What To Watch For

Amazon’s first-quarter earnings call is at 5:30 p.m. EDT Thursday. Forte says he’ll be listening for details on “heir apparent” Jassy’s leadership transition, potential government regulation, the Alabama vote against unionization and costs incurred as a result of the Covid-19 pandemic.

Big Number

$3,993. That’s how high analysts think Amazon shares can go over the next year, according to Bloomberg data, implying that the stock could soar about 14% from current prices of about $3,474.

Surprising Fact

A booming pandemic rally helped Amazon shares nearly double since the start of last year, creating the nation’s third-largest company with a market capitalization of nearly $1.8 trillion.

Further Reading

Earnings Preview: What To Expect From Amazon On Thursday View Article (Forbes)

Jeff Bezos To Step Down As Amazon CEO (Forbes)

Jeff Bezos Is Once Again Worth A Staggering $200 Billion (Forbes)

Amazon to hike wages for over 500,000 workers (CNBC)

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