Amazon stock plunge 12% on guidance miss, soft consumer trends

Amazon (NASDAQ:AMZN) reported second-quarter earnings that surpassed analyst expectations, but its stock fell more than 12% early Friday due to softer-than-anticipated guidance for the third quarter.

The e-commerce and cloud computing giant posted adjusted earnings per share of $1.26 for the quarter ended June 30, 2024, beating the analyst estimate of $1.03.

Revenue came in at $148.0 billion, slightly below the consensus estimate of $148.68 billion but up 10% YoY from $134.4 billion in the same quarter last year.

Amazon's third-quarter revenue guidance of $154-158.5 billion fell short of analyst expectations of $158.2 billion, contributing to the stock's decline. 

"We're continuing to make progress on a number of dimensions, but perhaps none more so than the continued reacceleration in AWS growth," said Andy Jassy, Amazon President&CEO, highlighting the company's cloud computing segment.

In addition, online sales and third-party seller performance fell short of consensus by 0.3% and 1.2%, respectively. Management noted that although volume remained strong, lower average selling prices (ASPs) offset gains.

"This trend existed for past year and looks to continue in Q3," Jefferies analysts commented.

This suggests that consumers are "being very value-conscious," analysts added. "While more are choosing to shop on Amazon, they are buying cheaper items and spending less on high-priced discretionary items."

Amazon Web Services (AWS) reported sales of $26.3 billion for Q2, up 19% YoY, while the North America segment saw a 9% increase to $90.0 billion. The International segment grew 7% to $31.7 billion, or 10% excluding foreign exchange impacts.

Operating income came in at $14.7 billion, up from the $7.7 billion in the second quarter of 2023.