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Author: Alan LittleDate: 2021-08-02

Amazon (AMZN) -7% after first revenue miss since 2018

Amazon (AMZN) traded lower on Friday after its Q2 revenue fell short of forecasts, and CFO Brian Olsavsky warned of slower growth for the next few quarters.

Amazon (AMZN) closed more than 7% lower on Friday after a rare revenue miss in Q2 as the e-commerce giant warned of a slower growth rate during the next 12 months following its pandemic boom.

Amazon posted $15.12 earnings per share for the latest three months, which easily beat the $12.30 Wall Street consensus, but it was a top-line miss that dominated the post-report analysis.

Group revenues of just over $113bn fell short of the $115.2bn forecast despite rising 27% year-over-year, though that rate of growth was considerably slower than Q1.

Amazon CFO Brian Olsavsky blamed the lower figure on its impressive performance in 2020 and warned that growth is likely to slow in Q3 and Q4.

Barclays analyst Ross Sandler said that the revenue hiccup was a “rare occurrence for a high-quality name like AMZN”.

He added that it remains a long-term bull with an overweight rating and generous $4,130 price target but is now waiting for a “catalyst” before further upgrades.

There were signs of strength in the Q2 report, with Amazon revealing that advertising revenues soared 87.2% to $7.9bn, while Amazon Web Services sales climbed 37% to $14.8bn.

Online store sales fuelled by the recent two-day Prime Day event also jumped 15.8% to $53.15bn, though that did not match the $57bn consensus.

While the slowdown in revenue growth will concern investors, it is emerging as a broader trend after Apple (AAPL) and Facebook (FB) warned last week that there would be a comedown from pandemic highs.

Amazon shares traded lower on the Nasdaq for the whole session on Friday and eventually finished 7.56% in the red at $3,327.59.

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