- AMZN stock jumped after the earnings report late Thursday.
- Amazon recovers grond on revenue but Rivian loss grows.
- AMZN stock bounces as the market was short and had priced in more bad news.
UPDATE: AMZN stock rallied 11.9% to $136.80 on Friday morning after its Q2 earnings miss on Thursday night still impressed the market by beating revenue projections and offering up strong growth from its cloud business. The rally in the share price is, however, below the post-market spike of 13.6% on Thursday evening. The stock opened lower and reached a session low of $132.41 on Friday before steadily rising above $136. The session high thus far has been at $137.65, but the price movement has been tamped down after the initial run up.
Amazon (AMZN) stock soared in post-market trading on Thursday as the online retail giant engineered a relief rally in its stock based on its revenue recovery. Rivian (RIVN) continues to be a drag on the bottom line with an EPS loss missing estimates by a mile, but positioning and sentiment had been overly negative in Amazon. Hence a massive relief rally ensued after earnings.
Also read: Amazon Stock Deep Dive: AMZN price target at $106 with near-term risks offset by long-term growth
Amazon earnings news
A snippet from our recent deep dive on Amazon is reassuringly prophetic: "As outlined above, the Rivian stake should provide further losses, and the strong US dollar and supply chain issues will continue to put pressure on margins. However, we do feel the continued growth of AWS will serve to partially offset these concerns but only over a longer time horizon."
Rivian certainly did provide further losses to the tune of another $3.9 billion from Amazon's stake in Rivian. Again though Amazon Web Services (AWS) saved the day as revenue grew to just under $20 billion, marking a 33% yearly growth rate. Curiously, advertising also showed strong growth, moving nearly 20% higher from a year earlier to $8.7 billion. Amazon is not a social media company, but advertising metrics from Alphabet (GOOG/GOOGL), Meta Platforms (META) and Snap (SNAP) had all shown digital advertising declines. Revenue forecasts were solid with the company upgrading its outlook. The consensus was set at $126 billion, but Amazon is forecasting $127.5 billion at the midpoint of its guided range.
Amazon stock forecast
We are sticking with our HOLD rating as we tweak our forecast model slightly to account for impressive growth in AWS and the lower share count from the continued share buyback program.
Source: FXStreet calculations and Refinitiv
Technically, the outlook is more positive in the short term. A volume gap could see the rally extend up to $140, but that level would be strong resistance. Next quarter will also be difficult though. We feel a lot of this current rally was based on relief and under-positioning. The CEO has alluded to continued inflationary pressures that we mentioned in our deep dive review, and these will not have diminished by next quarter.
“Despite continued inflationary pressures in fuel, energy and transportation costs, we’re making progress on the more controllable costs we referenced last quarter, particularly improving the productivity of our fulfillment network,” said Andy Jassy, Amazon CEO.
AMZN daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.