Amazon Tops Estimates...
The big story from US earnings season yesterday was Amazon’s Q1 results. On the headline figures, the company posted earnings per share of $0.31 in Q1, a solid beat on the $0.21 figure Wall Street was looking for. Revenues were also higher at $127.358 billion vs $124.603 billion expected. While both figures came in above forecasts, revenues were seen lower against the prior quarter but up against the same period a year earlier.
...But Stock Falls on Weaker Outlook
Despite the positive results, Amazon shares fell after hours as traders reacted to the company’s growth outlook. Amazon CFO Brian Olsavsky noted that the Amazon Web Services (AWS) cloud unit had slowed in terms of customer numbers over the quarter. Additionally, Amazon warned that a further slowdown was expected as customers continued to optimise their spending on cloud services given the backdrop of higher inflation and higher interest rates which was dampening consumer appetite. In light of this, Amazon projects revenues in the April quarter to be around 5% lower than Q1.
Investors were clearly shaken by the less encouraging outlook from Amazon. With the company undergoing major restructuring, recently laying off around 27,000 members of its workforce, there is clearly a level of uncertainty within the company that is now feeding through into its stock price. With this in mind, Amazon shares look vulnerable to a further correction lower near-term.
Technical Views
Amazon
The rally off the 84.28 lows has seen Amazon breaking out above the 103.36 level. With momentum studies turned bullish, the focus is on a further move higher while price holds above this level. The bear trend line from 2022 highs is the next challenge for bulls, ahead of structural resistance at the 123.79 level.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.