Amazon Drops After Guiding To Worst Revenue Growth Since 2001, Slowing Prime Subscriptions

After two months of dramatic volatility in its stock, which saw the share price of Amazon first tumble to close 2018 then soar by in the past month, Jeff Bezos' online retailing titan was expected to report blow out earnings after what the company said was a record holiday period (while news of Bezos' divorce from his wife came and went without affecting the stock), and moments ago Amazon did not disappoint, when it reported both EPS and revenues which handily beat expectations, even as it reported guidance for the current quarter that came in well below Wall Street estimates.

In kneejerk response, the stock rose over 2% but has since trimmed its gains and was down slightly which perhaps is to be expected after the torrid gains the company enjoyed in the past month.

Here are the details from Amazon's just-concluded Q4:

  • EPS of $6.04, beating estimates of $5.56
  • Revenue of $72.4BN, beating estimates of $71.92BN
  • Operating income of $3.79 billion, also beating consensus estimates of$3.65 billion

A somewhat troubling trend to some, Amazon's revenue growth has been slowing in recent quarters, and in Q4 came in at 19.7%, the slowest since Q1 2015. And while Q4 revenue growth was nearly 20% year over year, a strong if the slowing number, it came amid a friendly backdrop of high consumer confidence, which was mirrored by robust chain-store sales. Moreover, it was the lowest year-over-year revenue growth for the company since mid-2015 as Bloomberg notes.

Outlook

Offsetting the strong, if slowing, historical numbers, however, Amazon guided Q1 net sales to be between $56 billion and $60 billionwhich however was below the consensus est. of $60.99B. Meanwhile, operating income is expected to come in between $2.3 and $3.3 billion, compared with $1.9 billion in Q4 2017, and also roughly in line with consensus estimate of $2.99 billion. Also, it is worth noting that the midpoint of the first-quarter revenue guidance - $58 billion - would represent year-over-year growth of just 13.6%. That would be the lowest for Amazon since the recession of 2001.

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