Amazon Stock Dives On Weak Q3 2021 Guidance
Shares of Amazon found themselves under significant pressure after the company released its second-quarter earnings report.
Amazon reported revenue of $113.1 billion, which was lower than analyst estimates. The company’s GAAP earnings of $15.12 per share exceeded analyst expectations but were not sufficient enough to provide support to Amazon shares.
In Q3 2021, Amazon expects to report revenue of $106 billion – $112 billion, which means that Amazon’s revenue will decrease compared to the second quarter. The company’s operating income is projected to be between $2.5 billion and $6 billion compared to $6.2 billion in Q3 2020.
The market was clearly shocked by the company’s quidance for the next quarter, and the stock opened with a big gap down. The stock has made an attempt to gain ground as some speculative traders decided to buy the dip, but it failed to develop upside momentum.
What’s Next For Amazon Stock?
Investors and traders got used to strong reports from Amazon so the soft Q3 2021 guidance dealt a major blow to the stock. Analysts expect that the company will report earnings of $55.86 per share in 2021 and $72.38 per share in 2022, so the stock is trading at roughly 46 forward P/E.
Amazon has always enjoyed rich multiples as investors believed in its growth story, and it remains to be seen whether one report will change the market’s view.
It should be noted that the report highlights potential problems for all leading tech companies as they may face slower growth in case the world succeeds in its battle against the coronavirus pandemic and gets back to normal life.
It’s too early to say that Amazon’s growth story is under question, and the stock will surely attract opportunistic buyers. However, it remains to be seen whether support from such buyers will be sufficient enough to push Amazon shares back to recent highs in the upcoming trading sessions.
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