Amazon's
Although there was some mild profit-taking on the gap up, the stock's rally has continued in the following days. As of February 7, the stock was more than 11% higher since releasing earnings, more than 20% higher since the October bottom and nearly 60% higher since the market bottom in late-December 2018.
Top and Bottom-Line Beats
Overall, the results show that the company's growth strategy and investments in next-day delivery are paying off as the company beat top and bottom-line figures. The biggest surprise was earnings per share coming in at $6.47 per share against expectations of $4.03. Profits were 8% higher compared to the same quarter last year and reversed a profit decline in the third quarter due to higher than expected costs.
Revenue for the quarter was $87.44 billion which beat the consensus of $86 billion and was 21% higher over the previous quarter last year. It validates Amazon's investment into next-day delivery since these results show that it's leading to more purchases. Customer engagement and shopping were at all-time highs, especially over the holiday season.
Growth Segments
Same-day and one-day deliveries quadrupled over the same period last year. These impressive metrics show that online shopping continues to be a larger part of retail spending, and Amazon's share of online spending continues to increase. As more people become accustomed to fast delivery and Amazon's delivery network grows, this growth seems durable and sustainable despite Amazon's already large size.
Amazon also gave first-quarter guidance which was above expectations. The company projects first-quarter revenue between $69 and $73 billion. CEO Jeff Bezos said that 150 million people are now Amazon Prime members. The fastest-growing part of Amazon's business, Amazon Web Services (AWS), reported revenue of $9.95 billion which beat analyst estimates as well. The 19% growth rate is a deceleration from 35% in the fourth quarter of 2018. Notably, AWS's growth rate seems to have plateaued, while Google's Cloud and Microsoft's Azure revenues continue to accelerate albeit from a smaller base.
Buy the Breakout?
Amazon's stock has broken out to new, all-time highs. This follows a more than two-year consolidation from September 2018 to February 2020 in which the stock was rangebound between $2,050 and $1,300. Bullish traders can consider getting long the stock with a stop-loss at the $2,050 level.
