Amazon (AMZN) – Get Amazon.com, Inc. Reports Following last week’s disappointing first-quarter earnings from the online retail giant, the stock continued to fall on Monday following its biggest one-day drop in 15 years as analysts began to reset price and rating targets.
In fact, Wedbush Securities analyst Michael Pachter removed Amazon from his “best ideas” list on Monday, noting that after Amazon’s surprise first-quarter loss and a dim near-term revenue outlook due to soaring operating costs, He calls it “investment price discipline.”
Amazon said its first-quarter revenue rose 7% from last year to $116.4 billion, slightly above analysts’ expectations of $116.3 billion, but the slowest year-over-year increase in more than a decade, with total operating expenses up 13.2% to $112.78 million.
The mismatch, and a $7.6 billion write-down on electric-car maker Rivian (RIVN) – Get Rivian Automotive, Inc. Class A Reportresulting in a surprise loss of $3.8 billion in the first quarter, second-quarter operating income forecasts in the range of -1 billion to +3 billion, and revenue in the range of $116 billion to $121 billion.
“Labor and physical space are no longer the bottlenecks in 2020 and much of 2021. However, our consumer business continues to face various cost pressures,” Amazon Chief Financial Officer Brian Olsavsky told investors on Thursday. “When you combine the impact of externally driven costs and internally controllable costs, you get about $6 billion in incremental costs in the quarter.”
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Stocks Today – 4/29: Dow down 900 points; Big tech earnings sniff; Apple, Amazon lead markets lower
“About two-thirds of these costs are within our control, and as demand normalizes, we remain focused on adjusting our cost structure and eliminating any cost inefficiencies,” he added. “Our guidance includes an expectation that we will incur approximately $4 billion of these incremental costs in the second quarter.”
Amazon shares fell 1.6% in premarket trading on Monday, opening at $2,446.30 a share. The stock plunged 14.05% on Friday, its biggest one-day drop since 2006.
Amazon Web Services was the usual bright spot in an otherwise disappointing first-quarter report, with revenue rising 36.6% from a year earlier to $18.44 billion and a recent order backlog of about $90 billion. The unit had just over $6.5 billion in revenue and a profit margin of about 35%.
“With e-commerce sales growth slowing, the company needs new revenue streams to sustain its high revenue growth and premium valuation multiple, which in our view exceeds AWS’ efforts,” said DA Davidson analyst Tom Forte. , which will continue to impress.” The group has a price target of $3,125 per share, but maintained its “buy” rating after last week’s first-quarter update.
