Shares in e-commerce giant Amazon look set to fall more than 6% when trading kicks off on Wall Street later today despite blow-out earnings. What has got the market riled up is the $1.8 trillion firm’s miss on consensus quarterly sales in the second quarter (Q2), its first under-hit since 2018.

Amazon's growth outlook also disappointed.

While earnings smashed Q2 expectations of $12.32, coming in at $15.12 versus $10.30 in the same quarter last year, revenues for the three months to 30 June fell short expectations, albeit marginally.

Amazon’s Q2 revenues came in at $113.1 billion, missing forecasts of $115.3 billion by 1.9%. While the miss seems almost immaterial, and growth was still an impressive 27%, especially for a company of its size, Amazon has a history of not disappointing investors and a stock price rating that demands near-perfection.

Refinitiv data puts the stock on a next 12-months price to earnings multiple of 53.

Growth in the second quarter was a lot lower than the 44% notched up in the first quarter, although this is hugely influenced by the seasonality of post Christmas spending.

Stripping out $2.5 billion of positive currency movements, growth would have been 24%, while adjusting for Prime Day shifting into June instead of July it would have been just 20%.

Added to the sales miss, growth is expected to slow even further in the third quarter to between 10% and 16%, including 0.7% of positive currency movements, compared with market forecasts of a 23% increase.

Although Prime Day was the most successful in the company’s history, with record numbers of people spending record amounts in 20 countries, overall sales across the platform were weaker than expected as customers were ‘doing other things than shopping’, according to chief finance officer Brian Olsavsky.

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Operating profit guidance for the third quarter was also disappointing, with the company penciling in somewhere between $2.5 billion and $6 billion against $6.2 billion a year ago.

The firm has seen staffing costs rise sharply as the job market has tightened. As well as paying joining bonuses, it is offering workers $17 per hour to fill the 75,000 roles it needs this year.

Yet Amazon's main profits driver, cloud business Amazon Web Services or AWS, continues to shine, with Q2 revenues up 37% to $14.8 billion as more companies brought forward their plans to move to the cloud.

That led to $4.19 billion of AWS operating profit, 54% of the overall group's $7.7 billion operating income.

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Issue Date: 30 Jul 2021