Amazon Reports Blowout Quarter, Bezos Stepping Down As CEO

With Amazon (AMZN) and Google (GOOGL), together representing a whopping $3.1 trillion in market cap almost as large as the entire Russell 2000, set to report earnings after the close Bloomberg noted that some investors were nervous that anything but a massive beat, well in excess of expectations would be required to avoid a dip in the Nasdaq (recall last week's drop in AAPL and TSLA stock following stellar earnings reports).

So what is the absolute lowest numbers that Amazon has to beat in Q4 to avoid sliding? Here are the consensus estimates:

  • Net sales: $119.70 billion
  • GAAP EPS: $7.34
  • AWS net sales: $12.77 billion
  • Operating income: $4.47 billion

Amazon is expected to post a record year, its sales supercharged by the pandemic with the online retail giant among the main beneficiaries. The debate retail watchers are having now is the extent to which people are going to go back to physical stores when the virus recedes.

As a reminder, 2020 was an investment year for Amazon, with the company opening warehouses and other logistics depots at a rate of about one a day. The pandemic’s surge in online shopping both drove demand for those facilities, and made Amazon’s operations more costly (mainly by reducing the efficiency of warehouses that weren’t designed for social distancing). Investors often take their cues after Amazon reports earnings by reading the tea leaves on the company’s spending plans. Does Amazon think it needs to keep building new warehouses and cloud-computing data centers? Or will Amazon use 2021 to grow into all the capacity it added a year ago?

With all that in mind, how did Amazon do? Well, it was another blowout quarter for the retailer:

  • Q4 Net Sales $125.56B, beating estimates of $119.70B
  • Q4 EPS $14.09, smashing estimates of $7.340, and more than double the $6.47 year ago.
  • Q4 Operating Income $6.9B, beating estimates of $4.47B, and up 77% Y/Y
  • Q4 AWS Net Sales $12.74B, just missing estimates of $12.77B
    • Amazon Web Services net sales +28% vs. +34% y/y, estimate +28.3%
  • Fulfillment expense $18.47 billion, estimate $18.52 billion
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