Earnings Expectations: Amazon’s Q3 Report
As the tech giant prepares to release its third-quarter results, analysts are predicting a 10% revenue growth, marking the fifth consecutive quarter of expansion in the low double digits. This growth is slightly slower than the 12.6% increase seen in the same period last year.
Distracted Consumers and Cost-Cutting Efforts
Amazon CFO Brian Olsavsky attributed the potential slowdown in sales to a busy news cycle, including the Paris Olympics and the attempted assassination of former President Donald Trump. However, CEO Andy Jassy’s cost-cutting initiatives, which began in 2022, are expected to drive earnings growth. The company has laid off over 27,000 jobs and discontinued its Amazon Today rapid delivery service, resulting in a small number of layoffs.
Operating Income Projections
Wall Street expects Amazon to report operating income of $14.7 billion, a 31% increase from last year. This growth is largely due to Jassy’s efforts to rein in expenses, which have been well-received by investors. Amazon shares have risen about 23% year to date, outperforming the Nasdaq’s 30% gain.
Prime Day Success and Project Kuiper Update
Amazon’s annual Prime Day megasale in July saw “record-breaking sales,” although specific figures were not disclosed. Online spending in the U.S. during the promotion event reached a record $14.2 billion, according to Adobe Analytics data. Analysts are also eagerly awaiting an update on Amazon’s Project Kuiper satellite internet service, which is expected to provide high-speed broadband internet to underserved populations around the world.
Investment and Revenue Opportunities
Third-party analysts estimate that Amazon may need to invest up to $20 billion to get Project Kuiper off the ground. However, Oppenheimer analyst Jason Helfstein believes that the potential revenue opportunity is significant, with a target audience of over 1 billion people. The firm has an outperform rating on Amazon’s stock.
Conference Call and Earnings Discussion
Amazon will discuss its Q3 report on a conference call with analysts at 5 p.m. ET. The company has not invited the press to a media call, which typically follows the earnings release.
Leave a Reply