Amazon (NASDAQ:$AMZN) has just reported its Q2 earnings, and the results were not what Wall Street was expecting. In Amazon’s defense, they did report a beat on revenue, but it was the huge miss on earnings that drove the stock down around 2% in after hours trading.
Important numbers in Amazon’s Q2 earnings report:
- Earnings Per Share: 40 cents per share versus $1.42 per share expected, according to Thomson Reuters consensus estimates
- Revenue: $38.00 billion versus $37.18 billion expected, according to Thomson Reuters
- Amazon Web Services (AWS) Revenue: $4.1 billion versus $4.08 billion expected, according to FactSet
Even though Amazon displayed healthy growth with a 25% increase in revenue, its profit took a massive hit as the California-based company continues to invest in numerous new areas, such as video and international expansion.
Based on the Q2 earnings report, it seems that Amazon Web Services has continued to act as the company’s primary growth driver, increasing 42% year-over-year, and bringing in $916 million in operating income. To put that into perspective, that’s more than double the North American business’s $436 million in operating income. Meanwhile, Amazon’s international business has continued to lose money with an operating loss of $724 million.
It’s surprising to hear that Amazon had such a huge miss on earnings, as there has been a lot going on at the company as of late, and investors had high hopes. In fact, it’s likely that Wall Street will want an explanation from CEO Jeff Bezos. Last month, Amazon disclosed its deal to purchase Whole Foods for $14 billion. It also launched numerous new Echo devices, and, on July 27, Amazon announced the launch of a new Prime Now service in Singapore.
Interestingly, the Q2 earnings results have come just as Jeff Bezos surpassed Bill Gates to become the richest person in the world.
Mentioned briefly, in recent trading after the market close, Amazon’s stock fell $22.45 a share (around 2%) to $1,023.55.
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