Amazon bucks the retail trendWe’ve heard a lot of bad news from big tech this week, but Amazon is here to turn those investors’ frowns upside down.
- Amazon shares were up as much as 14% in extended trading on Thursday, after the e-commerce giant reported a mixed bag of earnings that missed on the bottom end with LPS of $0.20 – partly bc of a $3.7bn loss associated with its Rivian stake – but solid revenue bucked the trend of its peers with growth of 7% (still its slowest in 20 years) to beat estimates at $121.23bn.
- Its cloud business and other key segments beat estimates too. Ad revenue climbed 18% to $8.76bn and AWS revenue jumped 33% to $19.7bn – and it did all that while dealing with higher costs in fuel and energy, inflation, too many employees and too much warehouse space. All of these are impressive in light of recent comments from competitors, but worth noting its retail segment wasn’t as profitable.
- Rosy guidance helped boost the stock. Execs said that consumer confidence remains strong despite inflationary pressures, a starkly different opinion to that given by competitors Walmart and Best Buy earlier this week. Amazon expects sales of up to $130bn for the current quarter, representing growth of up to 17%, again bucking a trend of gloomy guidance across retail.
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Amazon’s healthcare pushIs Prime Medical on the way? Amazon’s been pushing into healthcare for some time now and it’s just turned things up a notch with a new acquisition.
- Amazon is buying One Medical for $3.9bn. It’s a company that boasts an offering of “user-friendly” primary care facilities and a robust remote medical practice, and is Amazon’s latest attempt to become a leader in the lucrative healthcare industry after launching Amazon Care three years ago. Vaccine with your delivery, anyone?
- It’s sure to give regulators a few gray hairs, especially given the medical sector handles such sensitive data. Government agencies get more vocal about Amazon’s growing power in the market, especially as the platform focuses on growing its empire into other industries.
- Speaking of which, Amazon is upping its electrification game too. The company continues to make a push towards net-zero carbon emissions by 2040, and has now started rolling out some of the electric delivery vans it’s been developing with Rivian since 2019 – it still wants to buy 100k of the vans going forward, though there remains some doubt about whether Rivian can deliver.
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Amazon flexes its muscles once moreThe retail giant is set to trial mall-based deliveries, marking another feather in its multi-talented cap.
- How many fingers does Jeff Bezos have in pies? Many. In fact, he may have his finger in your locally bought goods now (a sorry but quite real image), given Amazon is now seeing whether its Flex drivers can deliver mall-bought goods to consumers.
- Amazon pinged Flex drivers in the last month letting them know of an upcoming opportunity to retrieve packages from retailers in their area and drop them off at customers’ doorsteps. Initially, this test will be limited to Arizona, Nevada, and Virginia.
- With 3m Flex drivers in the US, peeps certainly won’t be short of delivery options. The move by Amazon is another push into widening its array of products available to be delivered. Soon, perhaps, users will be able to buy twelve different kinds of pie-making kits. ‘Cos capitalism.
Amazon’s ample lossesSales are down and inflation is up, all of which prove just slightly too much pressure for big tech behemoth Amazon.
- Amazon sank by as much as 12.7% in extended trading on Thursday after reporting a mixed Q1, widely missing on the bottom with EPS of $7.56, but beating marginally on the top end with revenues that were up 7% at $116.4bn – still, this marks Amazon’s slowest growth since 2001 and its second straight quarter of single digit growth.
- Inflation and higher wages were at fault for the disappointing numbers, according to Amazon anyway, and meant that its costs jumped by 5% of sales, or $3m every single hour. Yikes. The brand has also seen a dramatic drop in online sales, which were down nearly 4% from last year at $51.1bn. On the plus side though, its cloud biz is booming.
- Guidance left investors feeling on edge, worsened by the declining value of Amazon’s Rivian stake. Despite trying to offset rising costs by upping the price of Prime and adding a 5% surcharge for some US sellers, Q2 is forecast for revenue growth of around 3 to 7%, missing estimates. Seems like nobody is safe from the current market mayhem.
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Amazon competes with OG delivery giantsAmazon wants to upgrade from e-commerce giant to delivery giant with its new third-party shipping feature.
- Amazon will let its Prime customers use its vast shipping network and fulfillment centers for third-party products and orders through the new “Buy with Prime” feature.
- It wants to compete with the big dog delivery services like UPS, FedEx, and even the US postal service. The company said last year that it wants to be the largest delivery service in the US by 2022, and this will likely help it get there.
- Third-party selling already brings in the moola for Amazon, seeing revenues jump 11% to $30.3bn in its latest quarter. Amazon seems to be making a habit of turning internal tools and infrastructure into a cash machine – that’s how AWS started after all.
Some costs Amazon won’t swallowIt takes a pandemic, global inflation, and a war for Amazon CEO Andy Jassy to admit that price-hikes are coming to the platform. But who picks up the tab? Third party sellers, apparently.
- Amazon is introducing a 5% fuel and inflation surcharge to ease the pain of all the recent geopolitical and economic events. This will be introduced from April 28th onwards, and applies to US third party sellers.
- The decision will force merchants to pay for storage of their inventory and the use of Amazon’s supply chain. The judgement applies across all product types, most likely making some second-hand booksellers very nervous indeed.
- Fulfillment By Amazon (FBA) fees were previously raised by 10.6% on January 18. Last year saw them make $103bn in seller fees, representing 22% of overall revenue.
JD Lasica / Wikimedia Commons
Amazon plans space deliveriesAmazon’s internet beaming satellite project, Project Kuiper, takes one giant leap towards its mission to space.
- Amazon just announced the biggest rocket deal in commercial space history, detailing deals with three major rocket launch companies – Bezos’s Blue Origin (duh), EU-based Arianespace, and United Launch Alliance. So basically all the big ones except SpaceX.
- The contracts include 83 satellite launches that will take place over the next five or so years, and will cost Amazon “billions” of dollars. If all goes to plan, the e-commerce giant will have released the bulk of its first 3,236 satellites by 2026.
- There’s a new space race afoot. After the billionaires of the world raced to be the first in space, they’re now racing to provide global internet first. Amazon’s efforts are largely to keep up with Elon Musk’s SpaceX Starlink program, which is way ahead and already boasts 2,000 satellites in orbit, with plans for tens of thousands more.
I am Amazon, hear me roarMovie studio MGM has officially joined the Amazon family after the e-commerce giant passed its antitrust tests with flying colors.
🔍 Key points:
- Amazon got the green light from US competition regulators on Thursday to complete its $8.45bn purchase of iconic movie studio MGM, despite growing concerns about the online giant’s size and power. It comes nearly a year after the deal was first announced.
- This is Amazon’s biggest ever purchase in the media industry, and its biggest deal of any kind since it bought Whole Foods for $13.7bn in 2017. There is still a chance that regulators will block the move after a 30-day review period, but only time will tell.
- MGM has got a treasure trove of iconic films to its name, so its library will provide a huge boost to Amazon Prime, as well as help it gain ground on competitors like HBO Max, Netflix, and Disney.
Bradford Timeline / Flicker
Let me play the lion tooAmazon gets given the green light from the EU for its bid to take over as the king of the streaming jungle.
🔍 Key points:
- The EU has said Amazon can go ahead with its MGM purchase. The e-commerce giant has got unconditional EU antitrust approval for its $8.5bn acquisition of iconic movie studio MGM, which brought the famous Leo the Lion roaring to our screens.
- It’s a big deal for Amazon because massive mergers like this often pose a threat to competition in the industry. But, just because the EU doesn’t think it’s a problem doesn’t mean the US will agree – the FTC and its new strict head Lisa Khan still has to weigh in, and that could go either way.
- Elsewhere, Amazon is using the metaverse to help AWS users. The platform launched an online role-playing game that aims to help people learn cloud-computing skills that they can use on Amazon’s cloud network. It’s a brave new world.
Håkan Dahlström / Flicker
Amazon’s misdirectIt’s a good news, bad news kinda day for Amazon, but the e-commerce giant seems to have won the headline battle.
🔍 Key points:
- Amazon stock is about to get 20x cheaper. The brand announced a 20-for-1 stock split on Wednesday, its first since 1999, in an effort to attract smaller (and more) investors. It joins the list of other tech firms like Alphabet, Nvidia, and Tesla, who have recently announced stock splits for the same reason.
- Now for the bad: Amazon has been referred by the DOJ to a congressional committee for “potentially criminal conduct” by the company and its execs, who allegedly did not cooperate with a recent competition probe. Amazon denies it, but we doubt regulators will give up that easily.
- Shares rallied 6% in extended trading, so apparently investors were more keen on the good news – unsurprising considering the market rn. Investors were potentially also cheering on the fact that Amazon said it will stop sending products to Russia and will temporarily stop access to its streaming platform.
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Bye bye bricks and mortar (again)Amazon is shaking up its brick and mortar strategy, and in an ironic turn of events, is shutting down a bunch of its book stores.
- Amazon is closing 68 of its brick-and-mortar bookstores, pop-ups, and stores carrying toys and home goods in the U.S. and U.K., bringing an end to one of its longest-running retail experiments.
- The e-commerce giant says it’s going to focus more on grocery delivery after failing to see the returns it hoped for when launching the first physical shop in 2015, with last quarter showing physical stores boasting only 3% of overall sales.
- Its Whole Foods investment is paying off though. The company made a huge move into physical retail with its $13bn acquisition of Whole Foods in 2017, and since then it has also launched 24 locations for its Amazon Fresh supermarket – so groceries seem to be the way forward.
Team work makes the dream workAmazon and Visa (V) put hero masks on, setting their grievances aside for the good of the consumer.
- Amazon and Visa have reached a “global agreement” to settle a dispute over Visa’s fees, which Amazon said were far too high.
- The e-commerce giant threatened to stop using Visa on its platforms in the U.K and added a surcharge elsewhere, but as Visa said at the time, “when consumer choice is limited, nobody wins” – so Amazon is dropping its 0.5% surcharge for using a Visa card on the platform at a global level.
- It’s in the interest of both of them. Amazon can’t cut off an entire network of consumers based on which credit card they have, and Visa is already contending with the growing “buy now, pay later” trend and doesn’t need to give users a reason to jump ship.
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Big tech investors get whiplashBig tech released some spicy earnings last week that left investors with whiplash from watching both the biggest loss and biggest gain in stock market history.
- It was all eyes on big tech earnings last week as investors tried to suss out what Q1 would hold in the face of rising inflation and interest rates – and there was a lot to take in.
- Amazon posted the biggest ever one-day stock market gain on Friday, seeing its market cap add $190bn thanks to a 13% bounce – ironically, it came one day after Meta (FB) chalked up the markets’ biggest ever one-day stock market loss and erased $240bn.
- Monness Crespi Hardt analyst Brian White thinks Amazon has done enough to prove itself, saying it’s “uniquely positioned to exit this crisis as one of the biggest beneficiaries of accelerated digital transformation”.
Illustration by TradingView
Alexa, play “Money Money Money”Amazon sure knows how to deliver, handing investors record Q4 revenue.
- Share prices grew by 10% in Friday morning trading after EPS easily outpaced expectations at $5.80, and revenue jumped 9% to hit $137.4bn – even more impressive when you consider the extra labor and supply costs that have hit other tech giants.
- A couple of business segments stole the show. Its stake in EV start-up Rivian (RIVN) brought in an extra $12bn, its AWS revenue jumped 40% to $17.8bn to represent 13% of overall revenue, and its advertising business made its earnings debut by boasting 32% growth to bring in $9.7bn in revenue.
- Amazon Prime is getting a new price tag, up 17% to $139 per year. It’s the first time it’s raised its prices since 2018, and as it remains one of the biggest sources of revenue for Amazon, investors saw dollar signs in their future.
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Tech stocks take the worst of itTech stocks are tanking in a risk averse market, enjoying their worst week since the pandemic started. Ouch.
- Amazon fell over 6% on Friday for its fourth consecutive day in the red, marking its worst week in over four years thanks to a 12% decline.
- A hawkish Fed and a weak start to corporate Q4 earnings is largely to blame. Netflix (NFLX) went first with a Q4 swing and a miss, piling onto investors' fears that consumer demand is weakening and sending growth stocks into the red.
- The bad news outshadowed Amazon’s new retail plans, which will see the e-commerce giant open its first IRL clothing store.
Illustration by TradingView
AWS takes down the webAmazon Web Services (AWS) went down yesterday, taking a whole lot of the internet with it, and proving just how far its domination goes.
- Amazon’s cloud AWS suffered an outage on Tuesday, rendering services like robot vacuums, Tinder, and (worst of all) Adele ticket purchases, totally useless.
- It was similar to a Fastly outage in June that took out sites like Reddit, CNN, PayPal, and the New York Times.
- Is big tech’s power getting too big? Around 80% of the cloud market is handled by only five big companies, Amazon being the largest, so any major shutdowns could impact the economy.
On Cloud 9Amazon is literally moving markets after its new deal with Nasdaq.
- AWS is taking North American markets to the Cloud, partnering with Nasdaq to create the GS Financial Cloud for Data program.
- It’s starting with an options exchange in 2022, but Nasdaq plans to shift all 25 of its markets to the cloud in the next decade.
- Cloud is finally penetrating financial services. The CME Group (CME) exchange inked a deal with Google (GOOGL) last month to move its trading systems onto the Cloud.
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Cloud-y with a chance of chipsAmazon Web Services (AWS) cuts out the middleman and gets into the chip game.
- AWS has launched two new computing chips that aim to take on the big dogs like Intel (INTC) and Nvidia (NVDA), which provide the chips it currently uses.
- With $45.37bn in sales last year, AWS is the world’s biggest cloud computing provider and spends a huge amount on buying processing chips for its data centers. Hence the move.
- Its CEO Adam Selipsky has big ambitions since taking over from Andy Jassy in May, aiming to diversify AWS tech to a broader range of industries. This could just be the start.
Illustration by TradingView
A jungle of antitrust finesAmazon’s legal team has a long hike ahead to handle the mountain of fines it just got handed.
- Amazon and Apple (AAPL) stand accused of anticompetitive cooperation by Italy’s antitrust regulator.
- The pair just got fined to the tune of $225m for blocking out competition on the sale of Apple's Beats headphones.
- The regulatory horizon is no less rocky in the U.S., with the FTC getting called on to block Amazon’s $8.45bn MGM acquisition on antitrust grounds.
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Amazon takes a standAmazon takes its battle with Visa to a new level, and consumers could get bruised in the scrap.
- Amazon won’t accept U.K. Visa (V) credit cards on its platform anymore because the transaction fees are too high.
- The decision comes after months of to-ing and fro-ing. Since Brexit, Visa (V) has been able to hike its UK fees, and retail merchants aren’t happy.
- Visa (V) is the vulnerable one here, losing 5% on the news, but if the decision spreads to the U.S. – where Visa (V) is the biggest card issuer – then it could be consumers that feel the pain.