Amazon shares tumble after earnings disappoint

Amazon shares fell more than 7% in early trading on Friday after the company reported disappointing second-quarter results on Thursday and provided weak guidance for the current quarter, suggesting that recent momentum fueled by the pandemic has been is slowing down.

The stock is on track to its worst day since March 12, 2020, when it fell 7.92%.

Amazon has warned that it expects to see slower growth over the next few quarters as it beats tough year-over-year comparisons to its business during the Covid-19 lockdowns.

Many consumers avoided physical stores to prevent the spread of the virus and flocked to digital retailers such as Amazon for essential and non-essential products during the pandemic. Over the past few months, the economy has continued to reopen, prompting some shoppers to return to stores, while also spending more on travel and other services.

Investors acknowledged that slower growth will put Amazon’s stock under pressure in the short term, but several analysts said they remain confident that e-commerce as a whole will continue to grow, benefiting Amazon as a result.

“AMZN reported income and [operating income] which were 2% and 1% below consensus and led 3Q below, “wrote Barclays analyst Ross Sandler in a note to clients Friday.” This type of error is a rare occurrence for a high-end name like AMZN, but it predicts the reverse The rise of the pandemic is proving challenging for many companies and despite the slowdown, AMZN continues to add core members and gain share in electronic commerce. This impression will not derail the case of the bull in the long run. [Amazon Web Services] and retail, but it probably means we are in range for the next several months until a catalyst emerges. “

On a separate note to clients, Baird analysts wrote, “We never like to see a fault.” But they pointed to superior results in Amazon’s other more profitable segments, such as advertising, cloud computing, and subscription services, as the biggest highlight in the company’s earnings.

“This is the quasi-recurring pattern that we have highlighted as deserving of a higher multiple,” said Baird analyst Colin Sebastian.

Amazon shares are up more than 3% since the beginning of the year. The S&P 500 is up about 18.6% over the same period.

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