Home / Business / Amazon needs prime numbers

Amazon needs prime numbers

Wall Street is planning a slight recovery for Amazon.com during the current period, which includes next week's Prime Day event.


Stefano Guidi / Getty Images


AMZN -0.81%

may be able to compose his own vacation, but the e-commerce giant is also very concerned about his ability to make it count.

On the first day of this year, Amazon's designation for annual summer sales comes at a time when growth defying the gravity of society is showing signs of slowing down. Amazon's latest quarterly report in April indicated that annual revenue growth was below 20% for the first time since 2015. The next report expected by the end of the month should show the same .

This report will not reflect the sales of Prime Day, which now spans two days from Monday of next week. But these sales will certainly have an impact on Amazon's forecasts for the current period, for which Wall Street is already planning a slight recovery. Amazon's total revenues are expected to grow 19 percent in the third quarter, a slight acceleration from the expected 18 percent growth for the second quarter.

This seems to be enough for investors. Amazon's share price has jumped 33% this year, enough to bring the company's value back to the $ 1 trillion range that it had briefly touched on last year.

An acceleration of growth seems feasible, especially with Amazon now offering a shipping day for many of its premium program products. But these efforts are also expensive, which may stop Amazon's profits.

Operating margins reached a record high of 7.4% in the first quarter and Wall Street expects full-year margins to reach 6.4% this year, compared to 5% for the full year. , 3% last year. But it is not certain that these estimates fully integrate all the costs borne by Amazon recently. It is investing heavily not only in strengthening its distribution infrastructure, but also in developing its cloud and media businesses. He also announced Thursday that he would spend more than $ 700 million to recycle one-third of his workforce. And to promote Prime Day, Amazon even asked Taylor Swift to participate in an exclusive live concert broadcast Wednesday.

Investors will find it difficult to quantify the impact of these expenses. Amazon does not generally disclose much useful data on Prime Day sales, or even the number of premium members. John Blackledge, of Cowen & Co., estimates that about 63 million American households subscribe, an increase of nearly 7% over the previous year. The good news is that there is still a lot of addressable market to exploit for Amazon. The bad news is that it will not be cheap.

Write to Dan Gallagher at dan.gallagher@wsj.com

Copyright й 2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Source link