Amazon shares rise after strong second quarter and guidance

Andy Gacy, CEO of Amazon.Com Inc. , during the GeekWire Summit in Seattle, Washington, United States, on Tuesday, October 5, 2021.

David Rider | Bloomberg | Getty Images

Amazon shares jumped 10% on Friday, a day after the company reported stronger-than-expected second-quarter revenue and gave optimistic guidance.

Sales for the three months ending in June grew 7% to $121.23 billion, above Wall Street expectations of $119.09 billion. It represents the third consecutive quarter of single-digit annual revenue growth for Amazon.

Amazon’s third-quarter forecast indicated sales growth could accelerate to between 13% and 17%. The company said it expects revenue this quarter of $125 billion to $130 billion, while analysts had forecast sales of $126.4 billion, according to Refinitiv.

Amazon and Apple reported positive results in a bleak earnings season for tech companies. Facebook’s parent company Meta, Alphabet and Microsoft reported disappointing results for the quarter, as decades of high inflation, rising interest rates and other macroeconomic pressures hit their businesses.

Wall Street welcomed Amazon’s earnings report, with one analyst calling the e-commerce giant a “port in the big storm,” as it so far appears to be weathering several headwinds challenging its tech peers.

“Overall, Amazon provided investors with very good earnings for the second quarter, in the midst of high profit volatility associated with macro via technology,” Deutsche Bank analysts led by Lee Horowitz wrote in a note to clients on Friday. The company, which holds the buyback rating of Amazon shares, raised its target price to $175 from $155.

Several analysts said the findings indicate that Amazon is making progress in the face of cost headwinds that have pressured the company in recent quarters. Amazon has faced high costs related to labor, supply chain, energy, and transportation, as well as the Covid-19 pandemic, among other factors. CEO Andy Gacy said Thursday that the company continues to operate with “controllable costs.”

With the successful two-day Prime Day event in July and mgmt [management] When discussing end-demand concerns in its core business, we see that Amazon is well positioned to produce a strong revenue growth story in the second half of ’22 [the second half of 2022]The company maintained its buy rating on the stock, analysts at Goldman Sachs, led by Eric Sheridan, said in a research note on Friday.

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