Amazon, Corporate Earnings, Nasdaq, Market Sentiment – Talking Points
- Amazon falls nearly 20% in after-hours trading on grim earnings report
- AWS and e-commerce sales missed expectations, weighing on sentiment
- Nasdaq faces headwinds as earnings disappoint amid rising rate environment
Amazon.com, Inc.—the e-commerce mega-giant—reported third-quarter earnings per share (EPS) of $0.28 on $127.10 billion in revenue. That beat the Bloomberg consensus estimates of $0.22 EPS but fell short of revenue expectations of $127.64 billion. Amazon plummeted around 20% in after-hours trading, extending the cash hours drop of 4.06%. The Nasdaq-100 Index (NDX) fell 1.67% as Meta stock weighed on the technology sector after posting disappointing results after the bell on Wednesday.
Amazon Web Services (AWS) missed Wall Street expectations, posting $20.54 billion versus an expected $21.01 billion. That is a discouraging sign for one of the company’s most prominent growth drivers at a time when the broader cloud space is slowing. Microsoft missed expectations earlier this week in its cloud segment, and Google also reported a slowdown.
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The online store sales were at $53.48 billion, which also missed the consensus estimate ($54.00 billion). Another worrying sign was retail subscription services, which grew marginally to 8.9 billion from 8.7 billion. That was softer than most analysts wanted to see. Overall, there isn’t much to get too excited about. Like Meta, Amazon may see several downgrades over the coming days, which may weigh further on the stock price.
The direction of tech stocks and the broader market is at the mercy of the Federal Reserve. Rate traders have started to price in peak hawkishness from the Fed, with Fed funds futures showing the terminal rate at 4.81% in May before falling to 4.25% in early 2024. However, a better-than-expected third-quarter GDP growth rate may force the Fed to hold course on hiking rates. The September personal consumption expenditures price index (PCE) is the next big print on the radar, due out tomorrow at 12:30 UTC.
Amazon – 1-Minute Chart
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— Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwater on Twitter
