- AMZN stock jumped after the earnings report late Thursday.
- Amazon recovers grond on revenue but Rivian loss grows.
- AMZN stock bounces as the market was short and had priced in more bad news.
UPDATE: AMZN stock rallied 11.9% to $136.80 on Friday morning after its Q2 earnings miss on Thursday night still impressed the market by beating revenue projections and offering up strong growth from its cloud business. The rally in the share price is, however, below the post-market spike of 13.6% on Thursday evening. The stock opened lower and reached a session low of $132.41 on Friday before steadily rising above $136. The session high thus far has been at $137.65, but the price movement has been tamped down after the initial run up.
Amazon (AMZN) stock soared in post-market trading on Thursday as the online retail giant engineered a relief rally in its stock based on its revenue recovery. Rivian (RIVN) continues to be a drag on the bottom line with an EPS loss missing estimates by a mile, but positioning and sentiment had been overly negative in Amazon. Hence a massive relief rally ensued after earnings.
Also read: Amazon Stock Deep Dive: AMZN price target at $106 with near-term risks offset by long-term growth
Amazon earnings news
A snippet from our recent deep dive on Amazon is reassuringly prophetic: "As outlined above, the Rivian stake should provide further losses, and the strong US dollar and supply chain issues will continue to put pressure on margins. However, we do feel the continued growth of AWS will serve to partially offset these concerns but only over a longer time horizon."
Rivian certainly did provide further losses to the tune of another $3.9 billion from Amazon's stake in Rivian. Again though Amazon Web Services (AWS) saved the day as revenue grew to just under $20 billion, marking a 33% yearly growth rate. Curiously, advertising also showed strong growth, moving nearly 20% higher from a year earlier to $8.7 billion. Amazon is not a social media company, but advertising metrics from Alphabet (GOOG/GOOGL), Meta Platforms (META) and Snap (SNAP) had all shown digital advertising declines. Revenue forecasts were solid with the company upgrading its outlook. The consensus was set at $126 billion, but Amazon is forecasting $127.5 billion at the midpoint of its guided range.
Amazon stock forecast
We are sticking with our HOLD rating as we tweak our forecast model slightly to account for impressive growth in AWS and the lower share count from the continued share buyback program.
Source: FXStreet calculations and Refinitiv
Technically, the outlook is more positive in the short term. A volume gap could see the rally extend up to $140, but that level would be strong resistance. Next quarter will also be difficult though. We feel a lot of this current rally was based on relief and under-positioning. The CEO has alluded to continued inflationary pressures that we mentioned in our deep dive review, and these will not have diminished by next quarter.
“Despite continued inflationary pressures in fuel, energy and transportation costs, we’re making progress on the more controllable costs we referenced last quarter, particularly improving the productivity of our fulfillment network,” said Andy Jassy, Amazon CEO.
AMZN daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
EUR/USD turns south towards 1.0200 amid risk-aversion
EUR/USD is heading south towards 1.0200 in early Europe, as bulls failed to keep reins near the monthly high. Mounting US-China tensions over Taiwan and recession fears weigh on risk sentiment and help the dollar find demand as a safe haven.
GBP/USD tests 1.2200 as risk-off flows dominate
GBP/USD is trading deep in red near 1.2200, as investors turn away from higher-yielding assets such as the GBP. Despite falling US Treasury bond yields, the dollar manages to gather strength amid risk aversion. US Pelosi's visit to Taiwan is the main event risk this Tuesday.
Gold bulls keep their sight on $1,786 amid Taiwan tensions
Gold price eases but upside remains favored amid escalating US-China tensions. The expected visit of US’ Pelosi to Taipei rattles markets amid China warnings. Gold bulls remain on track to test the critical resistance area at $1,786.
What does the future hold for Bitcoin price as Ethereum’s ‘Merge’ narrative takes over?
Bitcoin price is currently retesting the 200-week SMA at $22,794, anticipating a minor bounce. There are three trade opportunities that BTC presents, two of which favor the bears.
FXStreet Premium users exceed expectations
Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!