Jump to content

Amazon’s share price: what to expect from its Q4 results


MongiIG

Recommended Posts

Amazon’s share price has gained close to 25% since the start of the year. Can its upcoming Q4 earnings support further recovery for its share price?

AmazonSource: Bloomberg
 

 Yeap Jun Rong | Market Strategist, Singapore | Publication date: Monday 30 January 2023 

When does Amazon Inc report earnings?

Amazon Inc is set to release its quarter four (Q4) financial results on 2 February 2023, after market closes.

Amazon’s earnings – what to expect

Current market expectations are for Amazon’s upcoming Q4 revenue to come in at $145.4 billion, up 5.8% year-on-year (YoY). This comes after Amazon downgraded its fourth-quarter revenue back in October last year to be between $140 billion and $148 billion. Previous miss in revenue guidance led Amazon’s share price to plunge 13% in a single day, leaving upcoming guidance as one of the crucial factors to watch.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) is expected to come in at $18.2 billion, up 7.4% from a year ago.

Amazon Web Services (AWS) on watch as Amazon’s growth catalyst

Amazon Web Services (AWS) remains a key engine for the company’s growth, considering that it is Amazon’s highest-growth segment (27.5% year-on-year growth in quarter three) and has been taking up an increasing share of its revenue over the years. While there are some earlier hopes that cloud spending could still hold up as companies prioritise digital transformation, recent guidance from Microsoft has put AWS in a tough spot. At its latest earnings release, Microsoft has guided that Azure cloud-computing sales in the current period will slow by four or five points — down from the mid-30s percentage-wise at the end of the fiscal second quarter. This seemingly coincides with the series of tech layoffs announced over the past few months. Refinitiv estimates suggest that moderating growth in AWS may continue through the first half of 2023, which could leave room for disappointment in that the worst has not been seen. While Amazon’s share price has managed to pare initial losses due to the improved risk environment, the upcoming results could deliver another reckoning, if Amazon downgraded its cloud revenue forecast as well in the likes of Microsoft.

Aftermath of cost-cutting measures on close watch in earnings call

Earlier this month, Amazon has announced that it will be cutting 18,000 employees as it turns to cost-cutting measures to cope with the ‘uncertain economic conditions’. This is the largest layoff in the company’s history. Amazon’s operating margin has been on a declining trend since 2021, coming in at just 2% as of quarter three (Q3) 2022, down from 4.4% in Q3 2021. Higher costs remain a challenge that Amazon must deal with, as total operating expenses as of Q3 2022 continue to rise 17.6% from a year ago. Much will depend on how the management is able to convince market participants that recent cost-cutting measures will provide a turnaround for margins, but some challenges lie ahead with oil prices gaining some upside to kick off 2023 while wage pressures remain.

Retail spending still a mixed bag, outlook will be key

Amazon’s core retail business is heavily dependent on US consumers’ spending, and upcoming expectations suggest that it could still be a mixed bag. Based on its geographical breakdown, its ‘North America’ segment is expected to grow 8.9% from a year ago, but its ‘International’ business is expected to contract by 6.5%. Online store sales (giant bulk of its retail business) is projected to come in flat, with a slight contraction of 1% from the previous year. Any guidance on the consumer spending outlook could hold greater weight in driving market sentiments. While the January reading for the US University of Michigan consumer sentiment index has shown a recovery to its 8-month high (64.9), the improving spending outlook was not echoed by the world's two largest payment card network processors, MasterCard and Visa. From their latest result release, both companies saw purchase volumes on their cards climb less than expected and expect card spending to slow as inflation persists. The weakening trend for consumer spending was also presented with retail sales down 1.1% in December, the biggest drop since December 2021. Much will depend on how Amazon addresses this risk to its core business at its upcoming earnings call.

Amazon’s shares – technical analysis

There have been some bullish moves in Amazon’s share price lately, having lifted off the lower trendline of a falling wedge pattern. From its weekly chart, a bullish divergence was presented on the moving average convergence/divergence (MACD), along with a bullish crossover indicating upward momentum. However, a key resistance at the $102.00 level may have to be overcome, where a previous support-turned-resistance coincides with its 100-day moving average (MA). Overcoming this level may pave the way towards the $120.00 level next. A greater test of resistance may stand at a key longer-term downward trendline, which has held prices down on two occasions since 2021.

 

Amazon weekly chartSource: IG charts
Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • You all will agree with me that many of us tends to focus on big names like BTC, ETH, SOL, and XRP. I've followed this trend too. But lately, I've realized there's a whole world of opportunities beyond these mainstream coins. Taking a closer look at the market: BTC and ETH haven't doubled since the start of 2024. Meanwhile, some lesser-known crypto projects have shot up by 400% and more. I am not talking about memecoins  Just today while reading an article about ONDO and ZEEBU published by Bitget, I was amazed to see the incredible growth these two tokens have undergone in the past few months. While ONDO deals with tokenized real-world assets, ZEEBU is a loyalty token for smoother global transactions, rewarding users along the way. Both have seen incredible growth recently. Sure, holding BTC has its perks, but tokens like ONDO and ZEEBU are gaining traction fast. They've already hit billion-dollar market caps from humble beginnings. It seems like these underdog projects might be the ones to watch during this bullish phase. But the challenge remains: how do we identify gems in this evolving landscape?
    • Dopamine emerges as a beacon of innovation in the world of cryptocurrency management, offering a non-custodial, secure, and anonymous mobile app wallet. With over two million downloads and a robust user base, Dopamine is reshaping the landscape of decentralized finance (DeFi) on both Android and iOS platforms. Let's delve into the features and functionalities that make Dopamine a must-have tool for navigating the cryptocurrency market. Key Features: 1. Comprehensive Portfolio Tracking: Dopamine's native token, $DOPE, empowers users to monitor their favorite projects from a vast collection of over 10,000 coins, ensuring informed decision-making in the dynamic crypto market. 2. Enhanced Security Measures: With built-in Anti-Money Laundering services, Dopamine enables users to safeguard their assets by identifying potential fraud and assessing risk scores associated with their wallets. 3. Real-Time Market Insights: Stay ahead of the curve with Dopamine's ability to track market trends and identify coins making significant moves, ensuring users remain informed and proactive in their investment strategies. 4. Cross-Chain NFT Transactions: Seamlessly send and receive NFTs across various blockchains, including Ethereum, BSC, Fusion, and more, providing users with unparalleled flexibility and interoperability. 5. Efficient Information Management: Dopamine simplifies data management by allowing users to save essential information and access it instantly, streamlining their crypto journey with convenience and ease. 6. Convenient Fiat On-Ramp: Facilitating seamless transactions, Dopamine enables users to buy crypto directly from their credit or debit card within the app, eliminating the need for multiple platforms and intermediaries. 7. DeFi Gaming Integration: Dive into the exciting world of decentralized finance gaming with Dopamine, offering users access to a diverse range of DeFi games directly from the app, adding a touch of entertainment to their crypto experience. With its innovative features, commitment to user empowerment and upcoming listing on Bitget exchange, Dopamine stands as a revolutionary platform that caters to the diverse needs of cryptocurrency enthusiasts. As the cryptocurrency market continues to evolve, It remains at the forefront, providing users with a secure, versatile, and intuitive solution for managing their digital assets and exploring new horizons in decentralized finance.
    • Name of stock: Adventus Mining Name of Stock Exchange: TSX Leverage or Share dealing: Share dealing Ticker: ADZN Country of stock: Canada
×
×
  • Create New...
us