What Did Amazon Do This Week? - 30-04-2023 [+40 LINKS]
AMAZON HAS A GOOD QUARTER; SAYS ‘CAUTION AHEAD’
Amazon had good Q1 earnings causing the stock to go up 11%, but a cautious Q2 guidance moderated the initial market excitement. Amazon reported Q1 ad revenue up 21% YoY to $9.5B, vs $9.1B est., subscription revenue up 15% YoY to $9.7B, and North America segment sales up 11% YoY to $76.9 B. Staff is down 10%, so Amazon now employs 1.47 million people worldwide. Interestingly, Amazon neglected to include India in its figures for the first time in a long time. Many Analysts have taken this to mean Amazon is pulling back in the area. Possibly, but it’s a rough market at the best of times, so Amazon is always making plays that win and lose there while they find footing amidst hostile legislation. Right now, it’s not a pretty picture (strong competition, pullbacks, legal issues), so why add bad fuel to the fire when you want a positive response?
Amazon has undergone significant changes recently, from 27,000 employee layoffs to halting the expansion of Fresh and Amazon Go and slowing down on healthcare efforts after an initial frenzy. Additionally, future bets such as Halo and Amazon Care have been stopped, and various fees have increased, causing frustration among sellers. Amazon must now navigate these challenges over the next few quarters and emerge stronger. AWS has 32% of the market, and thanks to AI, there’s even more than just cloud money at stake.
Amazon still faces significant headwinds as customers cut costs and increased pressures from regulation come in. One good quarter does not steady a ship as large as Amazon, but the signs are good (although people want larger numbers, obviously). Amazon top brass expects revenue between $127 billion and $133 billion in the second quarter, up between 5% and 10% from the first quarter. Moving forward, critically analysing business news and not simply headlines and moments in time is important. Earnings provide a snapshot, and after many choppy quarters, Amazon needs several good ones for people to be happy. Keep an eye on India, as Amazon needs a new growth territory, and China certainly won’t be it for some time (if ever). Overall, Amazon's recent performance and strategy changes indicate the company continues to face significant challenges and needs to navigate them carefully.
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