As the pandemic wanes, Amazon sales will slow down | Business and Economic News
The Seattle-based company’s stock price fell 6% in after-hours trading.
Amazon’s second-quarter sales and current period forecasts were lower than analysts’ expectations, indicating that as people resume their old shopping habits, the rapid growth of the largest online retailer during the pandemic is weakening. The stock price fell more than 6% in the extended transaction.
As shoppers moved most of their spending from stores to websites, the Seattle-based company rebounded in the pandemic. Amazon has invested billions of dollars in pandemic safety measures to maintain operations while minimizing the spread of Covid-19 in its facilities and employ hundreds of thousands of workers to meet pent-up demand. The new CEO, Andy Jassy, ??who took over from founder Jeff Bezos on July 5th, must prove to investors that he has Can continue the company’s rapid sales growth and growing profits.
Investors ignored the better-than-expected profits and strong performance of the company’s advertising business and Amazon Web Services cloud division in the quarter. GlobalX analyst Pedro Palandrani (Pedro Palandrani) said that instead, they are focused on slowing down the development momentum of their core e-commerce business.
Palandrani said: “The important thing that investors are paying attention to is that the guidance for the next quarter is much lower than expected,” adding that this is in line with the positive earnings reports released by Microsoft and other large technology companies earlier this week In comparison, Amazon’s performance is outstanding.
Even before Amazon’s weak forecast, investors were worried that the company might lose momentum because people would return to pre-pandemic spending habits, such as traveling and dining out, which might reduce online shopping.
The Seattle-based company said in a statement on Thursday that revenues for the period ending September will reach between $106 billion and $112 billion. Operating profit will be between 2.5 billion and 6 billion US dollars. According to data compiled by Bloomberg, analysts expect an average profit of US$8.11 billion and sales of US$118.7 billion.
Sales in the second quarter rose 27% to 113.1 billion U.S. dollars, lower than the expected 115 billion U.S. dollars. For the period ended June 30, earnings per share were $15.12, while the average estimate was $12.28.
The stock price fell to a low of US$3,347 in after-hours trading and closed at US$3,599.92. As of the close, the stock has risen about 11% this year.
Bezos is still executive chairman, and the exact nature of his new role is a work in progress. Bezos has said that he wants to focus on new initiatives, which shows that Jassy will be responsible for overseeing Amazon’s daily business. Jassy was previously responsible for operating its profitable cloud computing unit Amazon Web Services.
AWS revenue grew 37% in the quarter to reach $14.8 billion. The company’s “other” revenue category, mainly advertising sales, increased by 87% to $7.92 billion. Both departments exceeded analyst expectations.
Amazon’s revenue during the pandemic comes from the addition of more Prime members, who pay monthly or annual fees in exchange for shipping discounts and other benefits. According to data from consumer intelligence research partners, as of the end of June, Amazon had 153 million Prime members in the United States, a year-on-year increase of 25%. Prime members shop more frequently on Amazon, spending twice as much on the site as non-Prime members.
Although competitors including Wal-Mart, Target and Best Buy have invested heavily in e-commerce, Amazon remains the unparalleled e-commerce leader in the United States, its largest market. According to data from EMarketer Inc., American shoppers will spend $367 billion on Amazon this year, an increase of 15.3% over 2020. Amazon’s share of all online spending in the United States is 40.4%, more than the total of the next nine competitors.