Amazon shares dipped to about 8.7% on Friday, the day after it reported mixed second-quarter results and gave a forecast for the third quarter that fell short of Wall Street’s forecast.
The gain in revenue in the second quarter increased to 10% from a year earlier to $147.98 billion, dipping down to the $148.56 billion forecasted by LSEG. Net income at Amazon almost increased twice from a year earlier to $1.26 per share, becoming the top of analysts’ lists of estimates of $1.03 per share, providing the latest evidence that the company’s focus on cost-cutting is bolstering its bottom line.
Amazon expects revenue of $154 billion to $158.5 billion for the third quarter, which runs through September. The midpoint of the range, $156.25 billion, went down from the consensus hope of $158.24 billion, according to LSEG.
Amazon claimed that it saw softer-than-anticipated sales because consumers continue to “trade down” to lower-ticket items, such as daily needs essentials and consumables, which happen to be cheaper and used up on a regular basis.
Amazon CFO Brian Olsavsky said on a call with reporters that a chaotic news cycle means that consumers are even more distracted than normal and will likely wait to make a purchase or abandon their cart altogether.
The CFO fingered the Olympics, the ramp-up to the presidential election, and the assassination attempt on former President Donald Trump as events that have distracted consumers and made it a difficult task to forecast.
JPMorgan’s analyst said Friday they were not worried about the retail miss and were more encouraged by the continued strength in Amazon’s cloud computing segment. Amazon Web Services revenue got to $26.3 billion during the quarter, making it at the top of consensus estimates of $26 billion.
Analysts at BMO Capital Markets acknowledged that they were happy that AWS development moved up for the third straight quarter, demonstrating that the cost optimization witnessed in recent quarters is now in the rearview mirror.
