Amazon will release its second quarter earnings on Thursday afternoon, and analysts will pay close attention to how continued inflation affects the company’s top line and bottom line.
Revenue is expected to be US $119 billion, with a year-on-year increase of 5%, and earnings per share of US $0.14, lower than US $15.12.
Andy Jassy, CEO of Amazon, mentioned inflation and supply chain pressure in the company’s first quarter financial report, which reported the lowest revenue growth rate in more than 20 years. After the first quarter profit in April, the share price fell by more than 10%.
Analysts at wedbush said that Amazon’s revenue in the second quarter may be lower than expected due to macroeconomic challenges.
Wedbush analysts wrote in a report this week: “although higher inflation will lead to higher pricing and market costs (8-15%), which will benefit Amazon’s retail business, we believe that the large inflation rate in the second quarter directly led to a decline in consumers’ discretionary spending.”. They said that revenue unrelated to Amazon’s online services may decline by 2.5% to 5% year-on-year.
Others remain optimistic about the company’s short-term and long-term prospects. Analysts at JPMorgan Chase said in a report that “given the low price, wide range of options and fast delivery speed”, Amazon will still gain share in the recession environment. The report added that the company’s cloud business Amazon Web services may play a role in boosting.
JPMorgan Chase analysts said: “although the macro environment is more severe, we still expect AMZN to accelerate growth in the second half of the year and show profit growth in the case of rising costs, and AWS should prove more resilient, although not immune, to the broader economic slowdown.”.
Shopify said on Tuesday that it would cut 10% of its workforce due to slower revenue growth. According to the Wall Street Journal, the e-commerce giant and Amazon’s competitors predicted that the recent e-commerce boom driven by the pandemic would continue, but this bet did not work.
Amazon’s stock fell more than 4% in after hours trading on Monday, while retail rival Wal Mart lowered its profit guidance and blamed inflation.
Amazon mentioned inflation when it announced this week that it would raise fees for major European members. In February, it raised its main membership fee by $20 in the United States.
Amazon is also coping with rising labor costs. In September, the company said it was raising the average hourly wage of American warehouse workers to $18 an hour. Amazon said in February that it would more than double the maximum basic salary of its company and technology employees to $350000. It has not announced a hiring freeze or slowdown like other technology giants such as apple and Google.
Amazon has 1.6 million employees worldwide. In 2021, the company employed 337000 people.
Earlier this year, due to the unexpected increase in costs, Amazon announced a 5% fuel and inflation surcharge on sellers using its transportation services in its market.
Due to the general downturn in technology stocks, Amazon’s share price fell nearly 30% this year. The 20 to 1 stock split of the company took effect on June 6; The stock initially rose more than 5%, but now the trading price is roughly the same, about $120 / share.