Amazon (AMZN) Stock Surges on Massive Earnings Beat

Jeff Bezos continues to prove to Wall Street that he can run his $900 billion market cap company as a profitable business.

Amazon AMZN Stock (NASDAQ:AMZN) stock jumped more than 3% after-hours Thursday after the company beat 2Q 2018 earnings expectations. The e-commerce giant reported revenue of $52.9 billion, or $5.07 a share, after earning $37.95 billion, or 40 cents a share, in the year-earlier period.

Although it missed on revenue — the Street consensus was an earnings-per-share (EPS) gain of $2.50 on revenue of $53.4 billion — the 1,167% EPS spike from a year earlier was enough to push the stock up during after-hours trading.

GBH Insights’ Daniel Ives said in a note to clients that Amazon’s “massive beat on the margins/EPS and healthy profitability outlook going forward will be a major positive that investors will focus on when digesting results.”

Amazon’s profitable quarter, which saw the company’s net income increase twelve-fold – jumping from $197 million to a record $2.53 billion year-over-year (y/y) – came even though the nearly $1 trillion market cap company invested heavily in fulfillment centers, new stores, and pricey content deals. Amazon’s second-quarter profit expansion, its largest, was mainly driven by the growth of company’s high-margin businesses, like cloud and ads. In fact, despite competition from Microsoft (NASDAQ:MSFT) and Google (NASDAQ:GOOG, GOOGL) Amazon Web Services revenue came in at $6.1 billion, 49% higher when compared with third quarter 2017. “Other” revenue, which is mostly comprised of advertising sales, increased 132%, bringing in $2.2 billion. Overall, Amazon’s revenue increased 39% year-over-year, while the company’s North America revenue and international sales jumped 44% and 27%, respectively.

Other highlights for the Seattle-based company during the quarter include the growth of Amazon’s voice-assistant Alexa. Amazon CEO Jeff Bezos noted in a statement that “there are now tens of thousands of developers across more than 150 countries building new devices using the Alexa Voice service.”

“We want customers to be able to use Alexa wherever they are,” he said.

On the guidance front, Amazon, which is worth noting accounts for about half of the online retail sales in the U.S, said it expects Q3/18 sales to be between $54 billion and $57.5 billion, a growth rate of between 23% and 31% compared with Q3/17. The guidance however, fell short of Wall Street estimates for $58 billion.

Amazon shares closed Thursday’s regular session down nearly 3% to $1,808. As of writing, ticker is changing hands at $1,888, up 80 points, or 4.48%.

AMZN has gained more than 70% in the past 52 weeks, compared to the S&P 500’s 15.3%.

Reference: Barron’s

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