Amazon's Earnings in Q2: Will Reopening Hurt Sales?

  Amazon's Earnings in Q2: Will Reopening Hurt Sales?  Does it give up gains while the restrictions are lifted?   The largest organization to benefit from the lockdowns was Amazon AMZN (NASDAQ) $3.604,20 -95,62 (-%2,58). At the beginning of the pandemic, it was observed that the international e-commerce giant increased its sales. Amazon is expected to report second-quarter earnings on July 29 after the market closes. But this quarter will be Amazon's first announcement at the reopening. As a result of vaccination, governments made decisions to ease restrictions. Investors are wondering how the company will perform as a result of the opening.

Amazon has truly grown in shutdowns

Amazon reported 44 % year-on-year overall revenue growth in the first quarter ended March 31. It should be remembered that last year, the closures took place on March 20. Therefore It is clear that the situation will not be the same when it reports its second quarter results. The second quarter of last year was the most acute phase of the pandemic for its largest markets, the USA and Europe. It is known that this year, the second quarter will be different. Regardless, Amazon's investors expect strong revenue growth for the second quarter, in the range of 24% to 30%.

Does it give up gains while the restrictions are lifted?

If the expectation is fulfilled It will have resulted in sales of over $100 billion in the third consecutive quarter. It established a trend that could have positive long-term effects for the company that Jeff Bezos founded. This massive increase in sales has allowed Amazon to take advantage of its fixed costs and increase operating profits. The company's operating profit rose from $14.5 billion to $22.3 billion in 2019-2020. This year, the company reported operating income of $8.1 billion in the first quarter and is heading towards $6.25 billion in the second quarter at the midpoint.

What does this mean for investors?

Analysts expect it to report second-quarter revenue of $115 billion and earnings per share of $12.22. It's important to focus on the long term to track a company's performance. The pandemic has brought millions of new customers to Amazon and strengthened its relationship with existing customers. It is certain that the reopening will do some damage to the company's sales. It seems unrealistic to expect Amazon to continue to increase its revenue at the rate during the lockdowns. Amazon's Earnings in Q2: Will Reopening Hurt Sales?  

Source: The Motley Fool

 

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