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Amazon Stock Tumbles As First Revenue Miss in Three Years Clouds Earnings Beat

Amazon posted a 27.2% increase in overall revenues, but the $113.1 billion total came in shy of Wall Street forecasts.

Amazon Inc  (AMZN) - Get Amazon.com, Inc. Report posted stronger-than-expected second quarter earnings as Prime Day and Web Services boosted its bottom line, but overall revenues fell shy of Wall Street forecasts, sending shares sharply lower in early trading Friday.

Amazon said net income for the three months ending in March was pegged at $15.12 per share, more than 46% higher than last year's $10.30 total and smashing the Street consensus forecast of $12.30 per share. 

Group revenues, Amazon said, surged 27.2% from last year to $113.1 billion, but came in shy of analysts' estimates of a $115.2 billion tally. Operating expenses were up 26.9% at 105.4 million, Amazon said.

Looking into the current quarter, Amazon said it sees operating income of between $3.5 billion to $6 billion on revenues in the range of $106 billion to $112 billion, compared to the Refinitiv forecast of $118.9 billion.

"This kind of miss is a rare occurrence for a high quality name like AMZN, but forecasting the back side of the pandemic surge is proving challenging for many companies, and despite the deceleration, AMZN continues to add Prime members and gain e-commerce share," said Barclays analyst Ross Sandler, who carries and 'overweight rating with a $4,130.00 price target on he stock. "This print won’t derail the long-term bull case around AWS and retail, but likely means we are range bound for the next few months until a catalyst emerges."  

Amazon shares were marked 7.8% lower in pre-market trading following the earnings release to indicate a Friday opening bell price of $3,319.20, a move that would trim the stock's year-to-date gain to around 1.9%.

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Amazon Web Services, the group's market-leading cloud business, saw net sales rise 37% to $14.8 billion, falling shy of the 51% gains recorded by rival Microsoft's  (MSFT) - Get Microsoft Corporation (MSFT) Report Azure business earlier this week.

Operating income for the group was marked 25% higher at $4.2 billion.

Physical store sales, Amazon said, rose 8% to $4.6 billion, while third-party seller services sales surged 38% to $25.1 billion. Online store sales rose 15.8% to $53.15 billion compared to a $57 billion Street estimate.

Amazon said advertising revenues (services and other sales) rose 87.2% to $7.9 billion in what might be the strongest line-item number in the second quarter report. 

Advertisers, eager to reach consumers that spend less time travelling amid work-from-home shifts triggered by the coronavirus pandemic, have been spending billions online in order to showcase goods and services to buyers flush with stimulus cash and wage increases.

Facebook's  (FB) - Get Facebook, Inc. Class A Report ad revenues were pegged at $28.58 billion, but the social media group said overall revenue growth would slow "significantly" over the second half of the year.

Google parent Alphabet  (GOOGL) - Get Alphabet Inc. Class A Report also posted impressive ad revenue gains over the three months ending in June, with sales up 70% to $50.44 billion. YouTube ad revenues, in fact, surged 83% to just over $7 billion.