Amazon shares fall 7%

30 July 2021
2 min.
Amazon shares fall 7%

E-sales slowdown

Amazon's second-quarter earnings came in below analysts' estimates; the company's third-quarter forecast also disappointed Wall Street. E-sales growth slowed, not even the Prime Day sell-off helped.

The world's largest e-retailer Amazon (AMZN) reported second-quarter financial results after the close of trading on Thursday.

Earnings per share rose 47% to $15.12, above analyst forecasts of $12.30. However, earnings growth slowed to 27% from 37%-44% in the previous three quarters to $113.08 billion, below average Wall Street analyst estimates of $115.2 billion.

AWS cloud business and Amazon digital advertising revenue

Amazon's cloud computing, subscriptions and digital advertising segments showed stronger revenue growth.

Revenue from Amazon Web Services' cloud division grew 37% in Q2. AWS revenues were $14.81 billion, beating analysts' forecast of $14.20 billion. The Other segment posted an 87% increase in revenues to $7.92bn.

Data provided by Consumer Intelligence Research Partners (CIRP) showed Amazon had 153 million Prime members, up 25% from a year earlier. Prime members often make twice as many purchases on Amazon's website as customers who do not have a Prime subscription.

As EMarketer Inc. notes, US shoppers will spend an estimated $367 billion on Amazon in 2021, an increase of 15.3% over last 2020. It's also worth noting that Amazon accounts for 40.4% of all spending in the US, which is more than the next nine competitors combined. Also, Amazon's workforce is also increasing: as of the end of June, there were around 1.34 million people working globally, an increase of 52% from the same month in 2020 So despite the slowdown in digital sales, Amazon remains the market leader in retail e-commerce. Growth in AWS's cloud division is accelerating, and the fastest-growing business is digital advertising.

Forecasts from Amazon

Amazon expects third-quarter sales of $106bn to $112bn, up 10-16% from the same period last year, but well below the average analyst estimate of $119.2bn.

Other major technology companies Facebook (FB) and Apple (AAPL), which released their reports earlier this week, have issued similar warnings about slowing growth in the third and fourth quarters of 2021.

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