By Dhirendra Tripathi
Investing.com – Amazon (NASDAQ:AMZN) stock slumped 6.0% in Friday’s premarket trading following as the company’s second-quarter revenue numbers, while robust, show signs of growth slowing.
Stimulus checks, low interest rates and fear of the virus all combined to fuel record purchases of groceries, gadgets, exercise equipment and furniture over last five quarters. A tempering of runaway sales growth numbers was expected after an unprecedented shopping binge.
But the drop to 27% growth in net sales from 44% in the first quarter of the ongoing financial year and 40% of April-June 2020 June caught the market by surprise.
A push to sales by moving up Prime Day to June didn’t help much. Sales since May 15 have been up just in the mid-teens excluding Prime Day, Amazon’s Chief Financial Officer Brian Olsavsky was quoted by Reuters as saying
Net sales came in at $113.1 billion. They were lower than analysts’ expectation of $115.33 billion, a rare miss for the company.
JPMorgan (NYSE:JPM), Morgan Stanley (NYSE:MS), Piper Sandler and UBS all cut their price targets for Amazon stock, amid signs of challenging times for Chief Executive Andy Jassy who took over from Jeff Bezos only this month.
Amazon Web Services continued to reap the benefit of shift to digital as more users went online and companies sought Cloud services to cater to their needs.
Revenue at AWS rose 37% to $14.8 billion.
Group net income rose 48% from a year ago to $7.77 billion in the June quarter. Diluted earnings per share was higher at $15.12 and surpassed analysts’ expectation of $12.24.
Amazon now expects third-quarter net sales to be between $106 billion and $112 billion, which represents year-on-year growth of 10%-16%.