Amazon Whipsaws After Reporting Fourth-Quarter Earnings
*By Chloe Aiello*
Amazon whipsawed after the bell, first surging and then erasing its earlier gains, after beating Wall Street expectations on its top and bottom lines, but reporting weak outlook.
Bolstered by a strong holiday season, Amazon ($AMZN) beat the Street's estimates for the first time in two quarters. Its previous misses invited suspicion the e-commerce giant’s growth was slowing even as competition heats up with rivals like Walmart domestically and Alibaba abroad.
Amazon reported earnings per share of $6.04 on revenue of $72.4 billion, beating the $5.68 EPS on $71.87 billion in revenue analysts were expecting, according to Thomson Reuters. Overall revenue climbed close to 20 percent year-over-year.
Despite its top and bottom lines beats, its revenue growth has actually decelerated. Last year, its year-over-year revenue growth rate was almost twice the rate Amazon reported this quarter. And it looks like Amazon anticipates that trend will continue next quarter.
Next quarter, Amazon said it anticipates net sales to fall between $56 billion and $60 billion ー an increase of between 10 to 18 percent year-over-year. Revenue in the first quarter is typically lower than holiday revenue, but the first quarter of 2018 saw a growth rate of 43 percent year-over-year.
"Very good beat for 2018, but in the record-breaking cold weather, Amazon should have had a much bigger beat, much stronger guidance. And guidance is disappointing," Burt Flickinger, a retail expert from Strategic Research Group, told Cheddar.
Amazon has in recent years seen wider margin businesses like cloud, advertising, and its marketplace flourish, [CNBC reported](https://www.cnbc.com/2019/01/31/amazon-earnings-q4-2018.html). But those businesses tend to have lower sales, meaning less overall revenue.
Amazon reported $7.43 billion in revenue for its cloud services sector, Amazon Web Services ー a jump of 45 percent since last year, when it reported $5.11 billion in revenue. Growth in AWS is key, especially in light of concerns over slowed growth in the cloud industry.
Uncertainty about Microsoft’s Azure [dragged on its earnings on Wednesday](https://cheddar.com/videos/microsoft-tumbles-after-earnings-report-on-cloud-business-concerns), following comments from chipmakers and equipment suppliers that business from cloud customers had slowed amid uncertain global economic conditions.
Amazon also said sales from advertising services and other related services came in at $3.39 billion ー almost doubling last year's revenue.
"It wasn't more than seven, eight years ago that AWS was this new kind of business emerging in Amazon. Advertising could be the next flywheel that really starts to make Amazon go to back to that high of $2 000 a share," said Christian Magoon, CEO of Amplify ETFs.
Nvidia on Wednesday became the first public company to reach a market capitalization of $5 trillion. The ravenous appetite for the Silicon Valley company’s chips is the main reason that the company’s stock price has increased so rapidly since early 2023.
Chris Williamson, Chief Business Economist at S&P Global, breaks down September’s CPI print and inflation trends, explaining what it means for markets.
A big-screen adaptation of the anime “Chainsaw Man” has topped the North American box office, beating a Springsteen biopic and “Black Phone 2.” The movie earned $17.25 million in the U.S. and Canada this weekend. “Black Phone 2” fell to second place with $13 million. Two new releases, the rom-com “Regretting You” and “Springsteen — Deliver Me From Nowhere,” earned $12.85 million and $9.1 million, respectively. “Chainsaw Man – The Movie: Reze Arc” is based on the manga series about a demon hunter. It's another win for Sony-owned Crunchyroll, which also released a “Demon Slayer” film last month that debuted to a record $70 million.
The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
The stunning indictment that led to the arrest of more than 30 people — including Miami Heat guard Terry Rozier and other NBA figures — has drawn new scrutiny of the booming business of sports betting in the U.S. The multibillion-dollar industry has made it easy for sports fans — and even some players — to wager on everything from the outcome of games to that of a single play with just a few taps of a cellphone. But regulating the rapidly-growing industry has proven to be a challenge. Professional sports leagues’ own role in promoting gambling has also raised eyebrows.
