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by Stephan Bauer, Euro on Sunday
For shareholders of the largest online retailer in the world, it was a roller coaster of emotions: during the negotiation, Amazon grew by 7% in the Nasdaq market, after the close of markets and the announcement of third quarter results, then dropped more than 7%. What happened? Amazon had announced a profit up, but sales were slightly below expectations. And: the forecasts were cautious.
Net profit of world number one in online commerce and cloud services, sales reached $ 2.9 billion. However, sales growth of 29% to $ 56.6 billion was just behind the expected 30% average. And Americans have issued a cautious view of the current Christmas quarter, the biggest turnover of the year. The target is $ 66.5 to $ 72.5 billion, which is equivalent to 15% growth over the previous year.
As a result, revenue growth has slowed significantly. This would be the slowest growth in three years. One reason for this is the Whole Foods food chain, which Amazon had picked up a year ago. The activity in the stores does not grow, which is reflected in the growth rates of the commercial giant. International trade is also penalized by the strength of the dollar.
The disappointment of investors disturbed by the stock market environment is understandable, especially since since November, the agreed increase in the minimum wage has gone from $ 7 to $ 15 an hour. According to Morgan Stanley's estimates, this will cost the Group approximately $ 3 billion in 2019. In return, however, the shares and options for many employees will be significantly reduced.
Meanwhile, CEO Jeff Bezos built the company continues. For example, Amazon Business, which provides business services, such as vendor management, now generates approximately $ 10 billion in revenue. Amazon Web Services (AWS), the group's cloud business, increased sales 46% to $ 6.7 billion in the quarter. Operating profit from this highly profitable business jumped 77% to $ 2.1 billion.
And financial strength has improved considerably. Cash from operations rose from just under $ 17 to nearly $ 27 billion – good news for shareholders.
conclusion: After the cautious outlook, the price fell in a volatile environment. But the company is doing well. An opportunity of entry.
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Image sources: Annette Shaff / Shutterstock.com, Joe Ravi / Shutterstock.com, Hadrian / Shutterstock.com
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