The cloud and retail giant Amazon Tonight (Thursday) published its reports for the second quarter of the year, and posted a quarterly loss of 20 cents per share, when analysts’ expectations were for a profit of 12 cents per share. In the corresponding quarter last year, the profit stood at $15.12, mainly thanks to the investment in Rivian stock.
As mentioned, Amazon’s bottom line continues to be harmed mainly as a result of a decrease in the value of an investment in the Rivian electric vehicle company. In the previous quarter, this investment caused Amazon to record a loss of $3.8 billion (adjusted loss of 37 cents per share) – a figure that sent the company’s stock down 14%, the sharpest it has recorded since 2006.
The good news is that the company exceeded the expectations of the market forecasters, and reported revenues in the amount of Rs 121.2 billion dollars. Amazon itself predicted that its revenues in the quarter would amount to 116-121 billion dollars, and the analysts’ estimates spoke of revenues of 119 billion dollars, somewhere in the middle of the target range. In the corresponding quarter last year, sales amounted to 113 billion dollars.
Amazon provided an optimistic forecast for the future: it expects to register in the third quarter revenues of 125-130 billion dollars, reflecting a growth of 13% to 17%. Analysts had expected sales of $126.4 billion. The stock flew by 10% in the aftermarket.
Net sales grew by 7.2% to 121.23 billion dollars, above expectations.
Sales of cloud computing services (AWS) activity jumped 33% to $19.74 billion, above expectations.
The investment in Rivian cut 3.9 billion dollars and transferred the company to a loss of 2 billion dollars, as mentioned 20 cents per share.
The forecasts are pessimistic due to the challenging market conditions
Even before the publication of the reports, the expectation was for another disappointing quarter for Amazon due to the challenging market conditions in the field of online commerce, its main field of activity. The sharp increase in food prices causes American consumers to buy fewer luxury goods, which caused Walmart, the largest retailer in the US, to cut its forecast for the entire year. At the same time, in the post-corona period, more consumers are leaving online and returning to shopping in malls and brick-and-mortar stores. Already in the previous quarter, Amazon recorded a decrease of 3% in revenues from online sales and this negative trend is expected to continue in the current quarter as well.
What should cover the negative result in online sales is Amazon’s growing activity in providing cloud computing services (AWS), where it is the world market leader. In the first quarter, Amazon’s cloud revenues grew by 35%. Amazon’s disadvantage in relation to Microsoft’s cloud, for example, is that its customer base consists of many start-ups, which are suffering from a sharp decrease in funding this year, which can affect Amazon’s results as well.
Amazon is trying to deal with the difficult conditions in the market by slowing recruitment and opening new warehouses. At the same time, the company raised the price of its prime subscription. The subscription price for shopping and streaming went up in February in the US and this week the increase was announced in Europe.