Amazon.com, Inc. has been one of the best performers on the stock market in recent weeks. Part of the reason for the firm’s rise in value stems from forecasts that Jeff Bezos will produce better than expected earnings this time around as Amazon Web Services turns a healthy profit. Stock may be very volatile once the real numbers are revealed.
Shares in Amazon have gained close to 6 percent in the last five days of trading, and are up by more than 11 percent over the last month. Amazon Web Service, the firm’s cloud business, it said to be doing very well while its retail arm looking to profit from Prime Day. Traders appear to believe that Amazon might be better off than Wall Street thinks.
Amazon forecasts come in
Wall Street is looking for Amazon.com to show a loss per share of $0.13 on revenue of $22.278 billion. Estimize, an earnings forecast crowdsourcing site, reflects a much more hopeful view of the firm’s three months through June. The consensus at Estimize now sits at a loss of 8 cents per share, far ahead of the Wall Street number.
Wall Street firms have also updated its forecast in the last week. More than one analyst has upped their estimates, and their price targets, in the wake of a surge in the value of Amazon.
Carlos Kirjner at Bernstein said that though it was far too hard to forecast an Amazon quarter accurately, he was sure that the numbers on Wall Street were “way off.” Mr. Kirjner says that Wall Street is off on everything, including sales at the AWS division, and in Amazon’s global retail business.
On Thursday morning Axiom analyst Victor Anthony said that Amazon looked great heading into the earnings reveal. He reckons that Amazon is worth a price target of $500, just ahead of the current price of the shares.
Mr. Anthony’s outlook is similar to the other hopeful forecasts. It’s not the headline numbers that Amazon reveals tonight that are going to matter, it’s the specific numbers in the retail and cloud segments.
He added that there is a “likelihood for improving operating leverage at retail” meaning that Jeff Bezos may finally decide to build a profit on the huge base of retail sales he has built for Amazon.
A recent report from John Blackledge at Cowen and Co. said that Amazon was set to be the biggest apparel seller in the US by 2017. He said that Amazon was winning across the retail world, and the firm’s long term thinking was paying off.
Traders aren’t looking for an outsize profit from Amazon because the firm’s CEO Jeff Bezos has promised again and again that he’s not going to give it to them. Instead they’re looking for growth in the firm’s core business, and in AWS, the cloud segment.
Amazon earnings are up
Amazon will release its earnings after the market closes for the day in New York on Thursday July 23. Traders will be lining up on either side of the firm’s shares as volatility after an Amazon reveal is almost a tradition.
Todd Gordon, an options trader that spoke about Amazon on CNBC on Wednesday, said that “The options market is implying a 9 percent move for the stock in either direction after earnings.” Mr. Gordon sees the firm’s stock going only one way, up.
Amazon shares have been in “a beautiful uptrend going all the way back to 2010,” he says and a breakout to $600 could be seen in the next 12 to eighteen months. In pre-market trading on Thursday morning shares in the firm were up by 0.7 percent.
Update 11:12 EST: Added info from Mr. Anthony’s report, and a report from Cowen & Co..