Amazon Hits Record High On Blowout Earnings And Guidance

With the bulk of the FAAM(N)G stocks reporting somewhat mixed earnings so far, with NFLX and MSFT disappointing offset by solid results from Google and Apple (although one wouldn’t know it looking at today’s stock price), investors were keenly looking for a tiebreaker from today’s Amazon earnings, where according to Bloomberg, the biggest question for Amazon is how sustainable are the growth trends that boosted its performance during the pandemic. The Internet giant was one of the biggest beneficiaries of shifts in consumer and business behavior last year.

Many consumers flocked to buy things online as they wanted to avoid infection at physical stores. Further, Amazon Web Services revenue soared on back of rising usage from Internet digital services – including remote-working software, videostreaming and gaming. But with the wider available of vaccines and as employees start to return to physical offices, the risk is some of these trends may start to reverse. Bloomberg also notes that investors will be also looking for any commentary on the future prospects for regulation and antitrust legislation.

Questions aside, Amazon shares rallied in recent weeks, gaining about 18% off a year-to-date low in March. The stock has been approaching an intraday record of $3,552.25 that was set in early September. Shares rose about 0.3% Thursday ahead of results.

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So with that in mind, how did Amazon do? Well, in the first quarter since Jeff Bezos announced his departure, we just had another blockbuster quarter for the online retailer which blew away consensus estimates and also guided solidly higher than expected, potentially tipping the scales bullishly for the megatechs. Here is a summary for Q1:

• Net Sales $108.5B, beating estimates of $104.56B
• EPS $15.79, beating estimates of $9.690
• Operating Income $8.9B, beating est. $6.11B
• AWS net sales $13.50 billion, beating estimate $13.09 billion
• Amazon Web Services net sales +32%, estimate +22.5%
• Q1 Online Stores Net Sales $52.90B, beating est. $50.63B
• Q1 Free cash flow increased to $16.8 billion for the trailing twelve months, compared with $11.7 billion for the trailing twelve months ended March 31, 2020.

Looking ahead, the company’s guidance was once again stellar:

• Q2 Net Sales $110.0B to $116.0B, smashing Wall Street est. $108.35B
• Q2 Operating income between $4.5 billion and $8.0 billion, compared with $5.8 billion in second quarter 2020.

Bottom line: the first post-Bezos quarter was nothing short of a “grand slam” with revenue and earnings smashing expectations, as did cloud computing sales and income. Looking ahead, the outlook for the current quarter also beat expectations, easing concerns about a post-pandemic let up in sales.

The stock predictably has surged after hours, hitting a new all time high of $3,667.66 before retracing some of the gains.

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