Amazon stock rises
Online e-commerce giant Amazon (AMZN) soared 9.4% on Wednesday, which was the highest increase in the FAANG group. The surge in the stock price came after the company announced robust holiday sales this season on Wednesday. Though the company didn’t disclose the revenue numbers for its holiday sales, the company reportedly claims that it sold record-breaking items during the holiday shopping season, as customers from all over the world have ordered more items than earlier seasons this year.
Amazon reportedly stated that it sold a higher number of its own devices, like the Echo Dot, Fire TV Stick 4K, and smart home devices such as the Amazon Smart Plug, Ring Video Doorbell 2, and the iRobot Roomba 690 as compared to the last year quarter. Amazon also said that millions of people signed up for free trials or subscriptions for Amazon Prime.
Strong holiday numbers might result in upbeat fourth quarter
Amazon’s claims of stronger-than-ever holiday sales could help the company to beat its weak guidance for the fourth quarter. The company disappointed its investors after it reported third-quarter 2018 earnings in October, and forecasted softness in the fourth-quarter revenues on the back of the weaker-than-expected holiday season.
Weak Q3 results and soft guidance
Amazon reported mixed third-quarter 2018 results in the September ending quarter wherein Amazon exceeded third-quarter earnings estimates and its revenues missed Wall Street expectations. Amazon’s revenue growth of 29% YoY in the third quarter was its slowest revenue growth on a YoY basis since the third quarter of 2017, where the company delivered revenue growth of 34%.
Amazon’s cloud business, Amazon Web Services (or AWS), also missed revenue numbers in the current quarter. AWS revenues of $6.68 billion lagged behind the Wall Street estimates of $6.71 billion amid increased competition from Microsoft’s (MSFT) Azure and Alphabet’s (GOOGL) Google Cloud.
Further, for the fourth quarter, Amazon expected revenue of $66.5 billion–$72.5 billion, below the Wall Street revenue expectations of ~$73.8 billion. The company had also predicted almost no year-over-year growth for the fourth-quarter operating income. It anticipated operating income in the range of $2.1 billion to $3.6 billion, below the analysts’ expectations of $3.9 billion and compared with last year’s operating profits of $2.1 billion.