Published: Sat, October 27, 2018
Money | By Bruce West

Amazon Q4 sales forecast comes in below estimates

Amazon Q4 sales forecast comes in below estimates

The third-quarter results were the second time running that billionaire Bezos' firm had fallen short of sales targets and, allied to a similar disappointment from Google-owner Alphabet (GOOGL.O), they sent a shockwave reverberating through stock markets.

To be sure, Amazon shares (AMZN.O) dropped by the most in four years on Friday after its outlook for holiday season sales missed targets, fanning concerns that Wall Street's tech darlings are finally starting to face stronger competition, Reuters reported.

Amazon's worldwide sales grew at just 13% to $15.5 billion, compared to a growth of 29% a year ago.

Heading into the print, Stifel analyst Scott Devitt has raised his near- and long-term revenue estimates for Amazon's retail, advertising, and AWS businesses and modestly increased his margin forecasts.

But the company's revenue for the period was lower than expected, and it offered a disappointing revenue forecast for the fourth quarter.

"Shares are up 52% YTD, hence this kind of "growth scare" is likely to weigh on sentiment in the near term, but ultimately will work itself out (likely by 1Q19)", Barclays analyst Ross Sandler wrote in a client note.

Q3 earnings per share: $5.75.

Shares in Alphabet fell about 6 per cent, knocking about $45 billion off its market value after it fell short on sales after beating estimates for the past eight quarters.

Q4 earnings per share (forecast): Between $66.5 billion and $72.5 billion. "We expect Other revenue, which consists largely of advertising services, to reach $2.3B (105% y/y) in 3Q, though believe there's potential upside to our estimate given the company's increased focus on enhancing its ad product portfolio in recent quarters". Analysts' projected US$57.1 billion.

Investors' focus will be on the company's performance in its Web Services business, which is expected to be a major boost to the company's profitability. In the holiday period past year, Amazon saw sales of $US60.5 billion.

Global net sales came to $15.55 billion, up 13 percent, with an operating loss of $494 385 million.

Those results were inflated by the company's acquisition of Whole Foods.

The company now groups its advertising group under "other" on its balance sheet. About half of our Diwali sales a year ago were in Q3. Operating income was $2 billion.

At 9:56 a.m. EDT the Dow Jones Industrial Average was down 274.85 points, or 1.10 percent, at 24,709.70, the S&P 500 was down 42.12 points, or 1.56 percent, at 2,663.45 and the Nasdaq Composite was down 144.96 points, or 1.98 percent, at 7,173.38.

Like this: