Amazon slides ahead of earnings but a wildcard could be in the mix
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Amazon (NASDAQ:AMZN) fell 6.10% in morning trading following earnings reports from Meta Platforms and Snap that rattled the e-commerce sector. In addition, some analysts have pulled back in the last few days on their expectations for Amazon's guidance update. Shares of Amazon are now down more than 10% in 2022 and stand about 25% below the 52-week high.
Ahead of today's report, UBS said Amazon shares are already effectively pricing in potential near-term weakness associated with freight and labor cost pressures likely to be highlighted with the report. Looking ahead, the firm expects margin rates to get some relief with slower growth in capacity, plus fading pandemic related and other costs both factoring in. The general consensus from UBS and across Wall Street is that the AWS numbers will impress again.
There are a couple of wildcards to watch with the report. Amazon (AMZN) could follow the path of Google and announce a stock split. The e-commerce giant could also fire off a price hike on its Prime membership. "Both prior increases have been for $20, so thatâs a reasonable conservative base case assumption (from $119 to $139), although a new increase would likely be larger since Amazon is facing substantial wage inflation," notes Jefferies on that development. The corporate capex cycle is also setting up well enough for Amazon that it could report an unexpected surge in anticipated cloud business similar to the Microsoft dazzler.
Seeking Alpha author Dividend Sensei laid out the case of why investors should buy Amazon today to retire rich tomorrow.