Amazon stock jumps on earnings beat, but its ad business lagged

Amazon stock jumps on earnings beat, but its ad business lagged

Amazon stock jumps on earnings beat, but its ad business lagged
Courtesy: Cale Guthrie Weissman | News Source: fastcompany.com

Amazon just keeps on being Amazon. Over the last few years, the company has been on a roll in terms of scale–and this past quarter it certainly grew. Still, we may finally be seeing signs of growth fatigue.

In its latest earnings report, the company disclosed that quarterly sales hit $59.7 billion, up from $51.04 billion the same quarter last year. This exceeded analyst revenue expectations of $59.68 billion. Meanwhile, Amazon hit earnings per share of $7.09, up significantly from FactSet estimates of $4.70. Its operating income, however, was slightly lower than expected, at around $2.29 billion–compared to analyst expectations of $3.1 billion.

Amazon stock seems to be doing okay. Shares spiked a little over 2% in after-hours trading but are now down to a little less than 1%. Amazon’s stock price is currently around $1,914. We’ll see if it’s able to eclipse the $2,000 mark.

Despite the general beat, the report wasn’t perfect. While Amazon’s web hosting business, AWS, grew a great deal this past quarter–hitting $7.7 billion in revenue compared to $5.44 billion the year before–other new businesses faltered.

In its “other” sales, which comprises mostly its burgeoning ads business, Amazon reported $2.71 billion in quarterly revenue. That’s down from the previous quarter’s $3.39 billion, albeit up from last year’s $2.03 billion. This dip may also be due in part to a change in accounting the company adopted last year that involved reclassifying advertising revenue.

Amazon is considered a dark horse when it comes to digital advertising–a potential player to break up the Google/Facebook duopoly. But seeing a decline quarter-over-quarter in this revenue won’t be a great signal to investors, as Amazon had previously grown every quarter up until now.

All the same, the company seems to be trudging along and growing apace. Its growth, however, may be slowing down, which could give investors pause. We’ll keep an eye out on the stock as the evening continues–as well as listen in on the earnings call for any other tidbits.