Shares of Amazon (NASDAQ:AMZN) are down nearly 9% after the company reported weaker-than-expected Q1 2022 EPS and a disappointing revenue outlook.
Amazon reported adjusted EPS of $7.56 per share in the first quarter, missing the consensus estimates of $8.36 per share, according to Refinitiv. Revenue came in at $116.44 billion, compared to the analyst estimates of $116.3 billion. Amazon’s revenue grew 7% in the first quarter, compared to 44% growth in the year-ago period.
Amazon Web Services (AWS) generated $18.44 billion during the period, topping the consensus projection of $18.27 billion. Advertising reported $7.88 billion in revenue, while analysts were looking for $8.17 billion.
The e-commerce giant sustained a $7.6 billion loss on its Rivian bet after the carmaker’s shares lost more than 50% of their value in the quarter.
The company’s Q2 outlook suggests that growth could slow down even further, in the range of 3% to 7% from a year ago. Amazon expects Q2 revenue to be in the range of $116 billion to $121 billion, short of the analyst expectations of $125.5 billion.
“The pandemic and subsequent war in Ukraine have brought unusual growth and challenges,” said Amazon CEO Andy Jassy.
Jassy added that Amazon made “encouraging progress on a number of customer experience dimensions, including delivery speed performance as we’re now approaching levels not seen since the months immediately preceding the pandemic in early 2020.”
Morgan Stanley analyst Brian Nowak reiterated an Overweight rating but cut the price target to $3,800 from $4,200 to reflect lower 2023 EBITDA estimates by roughly 14%.
“We remain bullish while acknowledging that the catalyst may have just gotten pushed back to October earnings when AMZN (we hope) will guide to another quarter of revenue acceleration and profitable retail quarter (4Q:21)...the first one of the year,” Nowak wrote in a note.
Raymond James analyst Aaron Kessler also remains bullish on Amazon stock due to several factors:
“1) we continued to expect solid long-term eCommerce growth; 2) Continued leadership and momentum in cloud; 3) robust advertising growth; and 4) expect an improving long-term margin profile driven by strength of high margin areas including AWS and advertising and productivity improvements for retail.”
Kessler also lowered the price target to $3,300 from $3,950.
By Senad Karaahmetovic