Amazon.com Inc. (NASDAQ: NASDAQ:AMZN) reported second-quarter earnings that fell short of Wall Street expectations, sending its stock tumbling in premarket trading.
The e-commerce giant’s mixed performance across its business segments and a cautious outlook for the third quarter have raised concerns among investors about the company’s growth trajectory in a challenging economic environment.
Amazon’s Q2 Revenue Falls Short of Expectations, Core Retail Business Showing Signs of Fatigue
Despite beating earnings estimates with $1.26 per share against the expected $1.03, Amazon’s overall revenue of $147.98 billion missed analyst projections by approximately $580 million.
The company’s cloud computing division, Amazon Web Services (AWS), outperformed expectations with $26.3 billion in revenue, while third-party seller services grew by 12% year-over-year.
However, the core retail business showed sluggishness, with the online stores segment growing only 5% compared to the previous year. Although the advertising unit grew by 20% to $12.77 billion, fell short of the anticipated $13 billion.
In the fiercely competitive digital advertising space, Amazon’s 20% growth in ad revenue placed it behind Meta’s 22% increase but ahead of Google’s 11% and Snap’s 16%.
Amazon Stock Dips Over 8% in Premarket Trading
The disappointing earnings report and cautious guidance for Q3 triggered a significant sell-off in Amazon’s stock during premarket trading.
As of 6:11 AM EDT, Amazon shares were down 8.49% to $168.45, reflecting investor concerns about the company’s near-term prospects. Despite this setback, Amazon’s stock has shown strong performance year-to-date, with a 21.15% return that outpaces the S&P 500’s 14.19% gain.
Amazon’s market capitalization is $1.93 trillion, with a trailing P/E ratio of 51.53 and earnings per share of $4.19. The company’s forward P/E of 39.37 and PEG ratio of 1.96 suggest that investors still expect significant growth despite the current challenges.
With a profit margin of 6.38% and a return on equity of 20.31%, Amazon demonstrates its ability to generate profits.
However, the lower-than-expected Q3 guidance, projecting revenue between $154 billion and $158.5 billion and operating income between $11.5 billion and $15 billion, indicates that the company anticipates ongoing headwinds in the coming months.
***
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
This article was originally published on The Tokenist. Check out The Tokenist’s free newsletter, Five Minute Finance, for weekly analysis of the biggest trends in finance and technology.