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Can a Strong Holiday Season Help Amazon Revive Its Soft Sales?

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Jan. 3 2019, Updated 7:31 a.m. ET

Amazon’s holiday sales

Last week on December 30, online e-commerce giant Amazon (AMZN) disclosed that this season’s holiday sales had been strong, though the company didn’t give exact sales figures. According to reports, Amazon managed to sell more products worldwide during the 2018 holiday shopping season than it did in the previous year.

According to CNBC, Amazon witnessed higher sales for devices such as the Echo Dot and the Fire TV Stick 4K as well as smart home devices such as the Ring Video Doorbell 2, the Amazon Smart Plug, and the iRobot Roomba 690 in the holiday season. Amazon also stated that millions of people had signed up for Prime free trials or subscriptions during the period. Amazon believes that its robust holiday sales numbers should help it beat its fourth-quarter sales guidance.

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Amazon’s trend of reporting soft sales

In the third quarter, Amazon exceeded its earnings estimates but missed Wall Street’s revenue expectation. Though Amazon’s revenue rose 29% YoY (year-over-year) in the quarter, its YoY growth was its slowest since the third quarter of 2017.

Amazon also generates revenue from its cloud business, AWS (Amazon Web Services), which posted revenue of $6.68 billion in the third quarter, missing the estimate of $6.71 billion. AWS competes with Microsoft’s (MSFT) Azure and Alphabet’s (GOOGL) Google Cloud.

Fourth-quarter guidance

Amazon forecasts weakness in its fourth-quarter revenue, as it predicted a soft holiday season during the third quarter. Amazon expected revenue of $66.5 billion–$72.5 billion in the fourth quarter, below Wall Street’s expectation of ~$73.8 billion. However, Amazon’s sales in the quarter could see a boost given its claims of stronger holiday sales numbers.

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