Amazon breaks new all-hime high after storming second-quarter
Amazon stock hit an all-time high of $1,880.05 on the back of second-quarter profits that beat Wall Street forecasts thanks to strong performance by the online retail giant’s non-retail divisions.
Amazon.Com Inc.
$179.54
13:09 23/04/24
Nasdaq 100
17,471.47
12:15 23/04/24
Amazon's net income of $2.53bn was the third consecutive quarter the company has surpassed $1bn, also smashing the expected $1.22bn consensus forecasts according to FactSet, while earnings per share of $5.07 per share crushed the predicted $2.47.
The impressive profits were largely driven by the growth of Amazon’s high-margin non-retail businesses, like Amazon Cloud and advertising. CFO Brian Olsavsky said those two businesses were a “big contributor” to profit growth.
Revenues of $52.8bn, while 39% higher than the same period in 2017, were less than the $53bn that analysts predicted.
In the first half of this year, Amazon earned $4.1bn, compared to the $921m in the first half of 2017. For the third quarter, the company expects sales to be between $54bn and $57bn, growth of 23% to 31% in comparison to the same quarter in 2017.
Analyst Andrew Lipsman at eMarketer commented: “Amazon’s powerful commerce engine keeps chugging along and is finally beginning to drop more to the bottom line. But the bigger story coming out of earnings is the significant margin expansion being driven by the acceleration in the cloud and advertising businesses.
“There’s still a lot of runway for both of these higher margin businesses, and with the rest of the business continuing to fire on all cylinders, the question now is whether we’ll see Amazon hit a $1 trillion market cap sooner rather than later.”
Amazon stock jumped around 4% to its new all-time high in early trading on Friday, up almost 60% for the year to date, before tailing off to below $1,830 as the session wore on.
"Amazon continues to perform at a level well-above its mega cap internet peers," said Barclays, "with revenue and operating income that was in-line and 68 percent above consensus respectively. Amazon Web Services revenue accelerated once again for the third quarter in a row.
"Operating income growth of 79% was the stand-out once again, and retail margins are also expanding at the highest rate in recent years.
"Valuation and sentiment continue to push the upper limits, but we believe the execution is justifying further upside for shares, as our operating income increases another 20 percent or more in the out year on this result. Amazon remains one of our favourite ideas in mega cap."