Earnings: 28 cents per share
Revenue: $127.10 billion vs. $127.46 billion, according to Refinitiv estimates
Like the rest of Big Tech, Amazon has had a rocky year so far as it confronts macroeconomic headwinds, soaring inflation and rising interest rates. Those challenges have coincided with a slowdown in Amazon’s core retail business, as consumers returned to shopping in stores.
Under CEO Andy Jassy, who took the helm from founder Jeff Bezos in July 2021, Amazon has responded to rising expenses by aggressively cutting costs across numerous divisions in recent months. It shed warehouse space, halted some experimental projects, shuttered its telehealth service and froze hiring for corporate roles in its retail business.
Still, analysts are expecting Amazon to report solid third-quarter results, thanks to easier comparisons with last year’s numbers and a potential sales boost from its annual Prime Day discount event, which was held in July.
Revenue growth is projected to come in at 15%, marking a return to double-digit expansion after three straight quarters of growth in the single digits.
Another bright spot could be Amazon’s advertising unit, which has been more resilient compared to peers including Meta, Alphabet and Snap, whose ads businesses have gotten whacked due to the economic environment and Apple’s iOS privacy changes last year.
On Tuesday, Alphabet missed expectations for the third quarter, and YouTube’s ad revenue declined for the first time since Google started breaking out results for the streaming video unit. Facebook parent Meta stumbled again on Wednesday, issuing disappointing earnings and a weaker-than-expected forecast for the fourth quarter.
“Besides allocation to TikTok, budget shift to lower funnel activities is the consistent point of feedback in our conversations with marketers this quarter,” said Rob Sanderson, a managing director at Loop Capital who recommends buying Amazon shares, in a recent note to clients. “Amazon is the lowest on the funnel.”
Wall Street will also be paying close attention to Amazon’s fourth-quarter guidance. The forecast could signal how much demand Amazon expects to see during the holiday shopping period. Analysts are already girding for a lackluster season, with online sales expected to grow just 2.5%, according to Adobe.
Earlier this month, Amazon hosted a 48-hour Prime Early Access Sale, which was the first time it has held two major discount events in the same year. The event jump-started the holiday shopping period early, and it could help juice Amazon’s sales in the fourth quarter. Analysts surveyed by Refinitiv are projecting fourth-quarter revenue of $155.15 billion.
Analysts have taken different approaches to their per-share earnings estimates because of Amazon’s hefty investment in electric-vehicle maker Rivian, which went public late last year. The plunge in Rivian’s share price forced Amazon to take a combined $11.5 billion markdown in the first two quarters of 2022. However, Rivian shares rebounded a bit in the third quarter, climbing 28%, which could lead Amazon to mark up the investment.
Amazon shares have slid 34% so far this year, while the S&P 500 index has dropped 20% over the same period.