Market Analysis

Amazon (NASDAQ) reported earnings for the second quarter that exceeded analyst predictions, but its stock declined over 8% in premarket trading on Friday due to weaker-than-expected guidance for the third quarter.

For the quarter ending June 30, 2024, Amazon posted adjusted earnings per share (EPS) of $1.26, surpassing the analyst forecast of $1.03. Revenue reached $148.0 billion, slightly under the anticipated $148.68 billion but showing a 10% year-over-year increase from $134.4 billion in the same quarter last year.

The company's guidance for third-quarter revenue, projected to be between $154 billion and $158.5 billion, fell short of the $158.2 billion forecasted by analysts, contributing to the decline in the stock price.

Amazon President & CEO Andy Jassy noted, "We're making progress across various dimensions, particularly in the continued acceleration of AWS growth," emphasizing the strong performance of the company's cloud computing division.

However, online sales and third-party seller performance missed expectations by 0.3% and 1.2%, respectively. Management highlighted that, despite robust volumes, gains were offset by lower average selling prices (ASPs).

Jefferies analysts observed, "This trend has persisted over the past year and seems set to continue into Q3." They added that consumers are "becoming increasingly value-conscious," opting for less expensive items and reducing spending on high-priced discretionary goods, even as more people shop on Amazon.

Amazon Web Services (AWS) reported a 19% year-over-year increase in sales, totaling $26.3 billion for Q2. The North America segment grew 9% to $90.0 billion, while the International segment saw a 7% increase to $31.7 billion, or 10% when excluding foreign exchange effects.

Operating income more than doubled to $14.7 billion from $7.7 billion in the second quarter of 2023.

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