Amazon slides after weaker-than-anticipated sales forecast
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Amazon (NASDAQ:AMZN) fell sharply in after-hours trading after reporting operating income below expectations for Q1 and setting cautious guidance for Q2.
The Seattle-based e-commerce giant saw a limited benefit from the Prime price hike for about a week during the quarter for existing members and for close to six weeks for new members.
Total revenue in North America in Q1 was $69.2B vs. $64.4B a year ago, while international revenue was $28.8B vs. $30.6B a year ago.
The cloud business was strong again as AWS revenue came in at $18.4B vs. $18.3B consensus and $13.5B a year ago. Advertising revenue was $7.9B vs. $8.2B anticipated.
Operating income was reported at $3.7B vs. $8.9B a year ago and the guidance range of between $3B and $6B. Operating margin was 3.2% of sales vs. 8.2% a year ago. The Q1 net loss includes a pre-tax valuation loss of $7.6B included in non-operating expense from the investment in Rivian Automotive.
Free cash flow decreased to an outflow of $18.6B for the trailing twelve months, compared to an inflow of $26.4B for the trailing twelve months a year ago.
CEO Andy Jassy: "With AWS growing 34% annually over the last two years, and 37% year-over-year in the first quarter, AWS has been integral in helping companies weather the pandemic and move more of their workloads into the cloud. Our Consumer business has grown 23% annually over the past two years, with extraordinary growth in 2020 of 39% year-over-year that necessitated doubling the size of our fulfillment network that weâd built over Amazonâs first 25 yearsâand doing so in just 24 months."
Looking ahead, Amazon expects Q2 revenue of $116B to $121B vs. $125.1B consensus and operating income of -$1.0B to +$3.0B
The Amazon (AMZN) conference call is set for 5:30 p.m.
Shares of Amazon (AMZN) fell 9.90% in after-hours trading to land at $2,612.97. AMZN was down 4.95% during the regular session.
Amazon (AMZN) is one of the most well-liked stocks on Wall Street with 50 Buy-equivalent ratings or higher on the books out of the 52 firms covering it.