Amazon's earnings forecast: Will Amazon's e-commerce business encounter Waterloo after the United States is unblocked?

Reporting period: the second quarter of 2021

Release time: After hours on July 29 (Thursday)

Expected revenue: $115.33 billion

Expected earnings per share: $12.24

Amazon (NASDAQ:AMZN) will announce its financial report after the market on July 29 (Thursday). Sales are expected to receive high attention. The growth rate is expected to slow down after the explosive growth due to blockade measures.

After the outbreak of the epidemic in March last year, more and more people were shopping online, and Amazon's sales continued to exceed expectations. However, with the reopening of social and economic activities in the United States and life returning to normal, some consumption may return to physical stores.

However, as of the end of the first quarter, there was no sign of a decline in online shopping. Amazon’s April earnings report showed that its first-quarter revenue increased by 44%, with earnings per share reaching $15.79, a record high and exceeding analyst expectations. Amazon expects revenue for the second quarter ending in June to be between $110 billion and $116 billion.

The two-day Prime Day promotion in June is also expected to contribute a lot to Amazon's second quarter results. According to JP Morgan Chase estimates, this event may bring in revenue of US$8.4 billion this year, an increase of 12% over last year.

In addition to Amazon's e-commerce business, its cloud computing and advertising business is also expected to grow strongly, and the profit margins of these departments are higher than the retail business. Sales of Amazon's cloud business AWS increased by 32% in the first quarter, while advertising revenue increased by 77%.

Amazon is still a good stock

After soaring more than 70% last year, Amazon's stock price has continued to rise by more than 12% so far this year, closing at $3,630.32 on Wednesday.

After the strong growth during the pandemic, analysts are still optimistic about Amazon's growth prospects and believe that this momentum will continue.

Recently, several Wall Street analysts have raised Amazon's target price on the grounds that the environment in which Amazon's business units are still in a favorable environment. Telsey analysts reiterated Amazon's rating of outperforming the market and said Amazon has "excellent execution."

The research paper wrote:

"We still believe that Amazon's sales and profits in the second quarter of 2021 will exceed market consensus, reflecting a number of favorable factors, such as the strong business trend of transitioning to online (including membership days), and the market share of each category will be Expansion, and excellent execution."

49 analysts gave Amazon a 12-month average target price of US$4,328.75, which is equivalent to 16% of upside potential.