LIVE
Economy|Technology
Amazon sales to decelerate as pandemic high wanes
The Seattle-based company’s shares fell 6 percent in after-hours trading.
Even before Amazon’s weak forecast, investors were worried that the company could lose momentum as people revert to pre-pandemic spending habits [File: Amit Dave/Reuters]
By Spencer SoperBloomberg
29 Jul 2021
Amazon.com Inc.’s second-quarter sales and forecast for the current period fell short of analysts’ expectations, suggesting the biggest online retailer’s rapid growth through the pandemic is waning as people revert to old shopping habits. Shares fell more than 6% in extended trading.
The Seattle-based company rallied through the pandemic as shoppers shifted much of their spending from stores to websites. Amazon invested billions on pandemic safety measures to keep operating while minimizing the spread of Covid-19 through its facilities and hiring hundreds of thousands of workers to meet crushing demand. New Chief Executive Officer Andy Jassy, who took the helm from founder Jeff Bezos on July 5, has to show investors he can continue the company’s rapid sales growth and rising profits beneath the heightened scrutiny of regulators in the U.S. and Europe.
KEEP READING
Wealthy nations ‘far from targets’ on COVID vaccine donations
US GDP grew 6.5 percent in Q2, well below expectations
Robinhood and the rise of teenage stock investors
Google parent sees record quarterly profits on back of retail ads
Investors overlooked better-than-predicted profits and a strong performance in the quarter from the company’s advertising business and Amazon Web Services cloud unit. Instead, they focused on slowing momentum for its central e-commerce business, said Pedro Palandrani, an analyst at GlobalX.
“The big thing investors are looking at is next quarter guidance came in much lower than expectations,” Palandrani said, adding that Amazon’s results stood out compared with the positive earnings reports issued earlier this week by Microsoft Corp. and other big tech companies.
Even before Amazon’s weak forecast, investors were fretting that the company could lose momentum as people revert to pre-pandemic spending habits like traveling and dining out, which may reduce online shopping.
Revenue will be $106 billion to $112 billion in the period ending in September, the Seattle-based company said Thursday in a statement. Operating profit will be $2.5 billion to $6 billion. Analysts, on average, projected $8.11 billion in profit on sales of $118.7 billion, according to data compiled by Bloomberg.
Second-quarter sales increased 27% to $113.1 billion, missing estimates of $115 billion. Profit was $15.12 a share in the period ended June 30, compared with the average estimate of $12.28.
Shares fell to a low of $3,347 in extended trading after closing at $3,599.92. The stock had gained about 11% this year through the close.
Bezos remains executive chairman and the exact nature of his new role is a work in progress. Bezos has said he wants to focus his attention on new initiatives, which suggests Jassy will oversee the day-to-day of Amazon’s business. Jassy previously ran Amazon Web Services, its profitable cloud-computing division.
AWS revenue jumped 37% in the quarter to $14.8 billion. The company’s “other” revenue category, primarily advertising sales, gained 87% to $7.92 billion. Both units topped analysts’ estimates.
Amazon’s gains during the pandemic came from adding more Prime members, who pay monthly or annual fees in exchange for shipping discounts and other perks. Amazon had 153 million Prime members in the U.S. at the end of June, up 25% from a year earlier, according to Consumer Intelligence Research Partners. Prime members shop more frequently on Amazon and spend about twice as much on the site as non Prime members.
Despite big e-commerce investments by competitors that include Walmart, Target and Best Buy, Amazon remains the unrivaled e-commerce leader in the U.S., its biggest market. U.S. shoppers will spend $367 billion on Amazon this year, up 15.3% from 2020, according to EMarketer Inc. Amazon’s 40.4% share of all online spending in the U.S. is bigger than its next nine competitors combined.
SOURCE: BLOOMBERG
RELATED
Ride-hailing app Didi’s shares surge on report it may go private
Bloomberg News reported that Chinese regulators were considering serious, perhaps unprecedented, penalties for Didi.
29 Jul 2021
Robinhood shares slide after lacklustre Nasdaq debut
The app’s muted Nasdaq debut comes after it was caught in a confrontation between retail investors and hedge funds.
29 Jul 2021
Kakao’s Kim eclipses Samsung heir as South Korea’s richest man
Brian Kim, who is now worth $13.4bn, upended Samsung’s heir to become Korea’s wealthiest man.
29 Jul 2021
Facebook expects future growth to ‘decelerate significantly’
The social media giant did, however, beat Wall Street estimates for the second quarter due to increased ad spending.
28 Jul 2021
MORE FROM ECONOMY
The UAE set to invest up to $14bn in post-Brexit UK
Lebanon gets IMF funding injection. How much will it help?
Mixed response as Hezbollah delivers Iranian fuel to Lebanon
In Pictures: SpaceX launches amateur crew on Earth-circling trip
MOST READ
France accuses Biden of sinking Australia submarine deal
What could an Evergrande debt default mean for China and beyond?
Photos: Taliban make themselves at home in strongman’s mansion
Afghan women dress up in colourful attire in ‘fight for identity’
Advertisement
About
Connect
Our Channels
Our Network
Follow Al Jazeera English:
© 2021 Al Jazeera Media Network