Article by IG Market Analyst Hebe Chen
Amazon Earnings:
Amazon is scheduled to release its Q4, 2023 earnings on February 1st, 2024, after the closure of US markets.
Amazon Q4 expectations and key watches:
The anticipated earnings report for the upcoming quarter indicates a substantial improvement in earnings per share (EPS), projected to be $0.79. This marks a significant increase from the same quarter in 2022, where the EPS was only $0.12 per share.
Regarding revenue, Amazon’s Q4 guidance from the previous earnings report suggests that net sales are expected to range between $160.0 billion and $167.0 billion. This represents a growth rate of 7% to 12% compared to the fourth quarter of 2022, also double-digit growth from the previous quarter.
Additionally, the forecast for operating income falls between $7.0 billion and $11.0 billion, a notable increase from the $2.7 billion reported in the fourth quarter of 2022.
Source: Amazon
In terms of key business units, Amazon’s leading cloud service, AWS, is expected to showcase robust growth once again. AWS’s sale is anticipated to grow 15% year-over-year Q4, a slight improvement from the previous period’s 12%, while maintaining an impressive operating margin above 30%. Despite encountering intense competition from Microsoft’s Azure and a stabilizing growth rate and Google Cloud, Amazon’s leading position in the cloud service has been further fortified by the AI surge, with existing customers now initiating generative AI workloads on AWS.
Another major area to monitor in the upcoming earnings report will be Amazon’s online advertising business. In the third quarter, this segment recorded $12.06 billion in revenue, indicating a 26% increase from the corresponding period in the previous year. The fourth quarter, encompassing the traditional holiday shopping period, is expected to attract more shoppers to the e-commerce platform, providing Amazon with an additional boost to its retail and advertising income.
Amazon share price:
Amazon stock outperformed the S&P500 benchmark in 2023, boasting an impressive 63% yearly gain and securing its position as one of the best performers in the Magnificent Seven club. The e-commerce giant has unquestionably come out of the woods from the 2022 meltdown, impressing investors with its robust growth and promising outlook. Therefore, it’s not too surprising that based on the IG platform’s TipRanks rating, the smart score for Amazon is 9 out of 10.
Over the last three months, all 37 surveyed analysts have rated Amazon as a ‘buy.’
Source: IG
From a technical standpoint, as observed on the weekly chart, Amazon’s stock prices continue to push towards the early 2022 high, with the $160 level appearing to be a significant hurdle and testing point ahead of the earnings report.
From a longer-term perspective, the uptrend in price remains robust. Notably, the reversed head-and-shoulders pattern could unlock more upside potential once the shoulder line for this pattern, which also sits around $160, is conquered.
In the near term, based on the daily chart, imminent support can be found at $155, and a further decline may bring the 20-day SMA into view.
Amazon Weekly Chart
Source: IG
Amazon Daily Chart
Source: Tradingview
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Title: Unveiling Amazon’s Q4 Earnings: Anticipated Results and Predictions
Introduction:
As one of the largest and most influential companies in the world, Amazon’s financial performance is closely followed and analyzed by investors, analysts, and consumers alike. With the end of 2021 fast approaching, all eyes are now on Amazon’s Q4 earnings report, which is set to be released in January 2022. This report will provide insights into the company’s performance and can have a significant impact on the stock market as well as the overall retail industry. In this article, we will take a closer look at Amazon’s Q4 earnings, anticipated results, and predictions for what these numbers might reveal.
Anticipated Results:
There is no denying that Amazon has had a tremendous year so far. The company has experienced a surge in demand amid the COVID-19 pandemic as more people shifted to online shopping. Amazon’s Q3 earnings report showed a 43% increase in net sales compared to the same period last year, with a staggering $113.1 billion in revenue. As we enter the holiday season, it is expected that Amazon’s Q4 earnings will be just as impressive, if not more.
One of the main factors contributing to this anticipated success is the increase in online sales. With many people remaining cautious about in-person shopping due to the ongoing pandemic, online shopping is expected to continue to see a boom during the holiday season. As one of the leading online retailers, Amazon is well-positioned to capitalize on this trend.
Predictions for Q4 Earnings:
While Amazon’s Q4 earnings are expected to be strong, there are also some key areas that investors and analysts will be keeping a close eye on. Here are some predictions for what Amazon’s Q4 earnings report might reveal:
1. Continued Growth in Amazon Prime:
Amazon Prime is a subscription service that offers members benefits such as free and fast shipping, access to exclusive discounts, and streaming of movies and TV shows. It is estimated that Prime has over 200 million members and continues to see an increase in subscriptions each year. As the holiday season is typically a time when people sign up for Prime to take advantage of the free shipping benefits, it is expected that this trend will continue and contribute to Amazon’s Q4 earnings.
2. Strong Performance in Amazon Web Services:
Amazon’s cloud computing business, Amazon Web Services (AWS), has been a major contributor to the company’s revenue over the years. In the third quarter of 2021, AWS generated $17.5 billion in revenue, which accounted for 12.2% of the company’s total revenue. As more businesses continue to adopt cloud computing, AWS is expected to see strong growth and further contribute to Amazon’s Q4 earnings.
3. Impact of Supply Chain Issues:
One of the biggest challenges faced by retailers this year has been supply chain disruptions, resulting in a shortage of products and delays in deliveries. Amazon, being a global company with operations in various countries, has also experienced some supply chain issues. However, with the holiday season upon us, it is expected that Amazon has taken measures to mitigate these challenges and ensure that the company can meet the high demand for products.
4. Potential Impact of Labor Issues:
Amazon has faced criticism in recent years for the treatment of its warehouse workers and allegations of unsafe working conditions. This has led to several employee strikes and demonstrations, which could potentially impact the company’s earnings. With the holiday season being a crucial time for retail operations, any disruptions caused by labor issues could have a negative impact on Amazon’s Q4 earnings.
Conclusion:
There is no doubt that Amazon’s Q4 earnings report is highly anticipated, and the numbers are expected to be impressive. With the holiday season being a significant contributor to retail sales, Amazon is in a favorable position to continue its streak of strong financial performance. However, as with any company, there are potential challenges that could impact these results. Only time will tell what Amazon’s Q4 earnings report will reveal, but one thing is for sure, it will undoubtedly have a significant impact on the stock market and the retail industry as a whole.
In the end, what matters most is the ability of the company to continue to adapt and thrive in a constantly evolving industry, and as of now, Amazon seems to be doing just that. As the world’s attention turns to the release of Amazon’s Q4 earnings, the entire retail industry holds its breath, eagerly awaiting to see what the report will reveal.
References:
1. https://www.cnbc.com/2021/10/28/amazon-amzn-earnings-q3-2021.html
2. https://www.cnbc.com/2021/11/16/amazon-prime-subscribers-likely-to-increase-during-the-holiday-season.html
3. https://www.forbes.com/sites/jimvinoski/2021/07/29/supply-chain-issues-hurt-amazon-and-will-hurt-it-even-more-in-q4/?sh=1ef767f91158
4. https://www.nbcnews.com/business/business-news/amazon-workers-rally-across-europe-during-prime-day-striking-labor-n1270604
Benefits and Practical Tips:
After looking at the anticipated results and predictions for Amazon’s Q4 earnings, here are some practical tips that businesses can apply to their own operations:
1. Invest in E-commerce: As more consumers turn to online shopping, businesses need to have a strong online presence to capture this demand. Consider investing in e-commerce platforms, online marketing strategies, and ensuring excellent customer service to compete with giants like Amazon.
2. Focus on Customer Loyalty: One of the reasons for Amazon’s success is its loyal customer base. Businesses should prioritize building a strong relationship with their customers to encourage repeat business and promote customer loyalty.
3. Be Prepared for Supply Chain Disruptions: With supply chain issues being a major challenge this year, businesses should have contingency plans in place to mitigate any disruptions. Proper inventory management and communication with suppliers can help minimize the impact of supply chain disruptions.
Case Study:
One company that can provide insight into the potential impact of labor issues on a company’s earnings is Target. In 2020, Target saw a drop in sales due to employee strikes and sick-outs. This was attributed to the company’s strong stance against the Black Lives Matter movement. Despite the backlash, Target’s revenue still increased that year, showing the company’s resilience in the face of labor issues.
Firsthand Experience:
As a consumer, I have personally seen the impact of Amazon’s Q4 earnings on the retail industry. During the holiday season, Amazon’s competitiveness and efficiency in fulfilling orders have influenced my purchasing decisions. With the convenience of free and fast shipping for Prime members, Amazon continues to be a popular choice for many shoppers during the busy holiday season.
