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Will Amazon Report Solid Results in 2Q15?



Amazon stock rose by 12% in July 2015

Amazon’s (AMZN) share price rose to $488.10 in New York on Monday, setting a record three days before the firm’s earnings report was to be released. Amazon is expected to announce its 2Q15 earnings on July 23 after the market closes.

The historic highs hit by Amazon stock suggest profit margin growth in the second quarter. Analysts expect the company will report total revenue of $22.37 billion for 2Q15. That would be a YoY (year-over-year) increase of 15.7% over 2Q14.

The company is guiding for a revenue range of between $20.6 billion and $22.8 billion, which translates to growth of between 7% and 18%.

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Amazon stock rose by 14% after better-than-expected 1Q15 earnings

Amazon’s YoY revenue growth was 15% in 1Q15, at the high end of its growth estimates of between 6% and 16%. It’s GAAP (generally accepted accounting principles) operating income came in at $255 million, way higher than the -$450 million to $50 million range that the company had guided for earlier. Amazon’s 1Q15 revenue growth rate was particularly impressive considering the strong US dollar (UUP) shaved 7% off the overall revenue growth rate.

Impact of currency headwinds on the whole large-cap tech sector

Amazon now expects its revenue to grow at a YoY rate of between 7% and 18% in 2Q15, as the chart above shows. Amazon expects currency headwinds to affect revenue growth by up to 7.5% in 2Q15.

The earnings season in the Internet segment of the technology sector has started off pretty well. Google (GOOG) and eBay (EBAY) recently announced their 2Q15 earnings. Facebook (FB) and Twitter are expected to announce their 2Q15 earnings on July 28 and July 29. Google and eBay delivered strong 2Q results. Google reported an 11% revenue increase, and eBay upgraded its guidance for 2015. It’s now predicting annual revenue growth of 3% to 5%.

These results suggest that Amazon could very well beat its own revenue growth estimates.


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