- Amazon had an underwhelming Q3 earnings report, which sent the stock tumbling.
- Nevertheless, Wall Street put Amazon on top of the most loved S&P 500 companies.
- Jeff Bezos employs a strategy that pays off in the long run for investors.
Amazon’s (NASDAQ:AMZN) third-quarter performance was far from stellar. The e-commerce giant reported Q3 earnings per share (EPS) of $4.23, which was significantly lower than Wall Street estimates of $4.62 per share. Meanwhile, reported revenue of $70 billion was up 24% year-over-year. This topped analyst expectations of $68.8 billion.
Amazon shares dumped by as much as 9% in after-hours trading after the release of the earnings report. Investors appear to have looked at three key areas that led them to believe that the stock is likely headed lower.
First,the EPS of $4.23 is down by over 26% from last year’s EPS of $5.75. This is the first time Amazon’s EPS declined on a year-over-year basis in two years.
Second, revenue of Amazon Web Services jumped by 35% compared to the same quarter last year to the tune of $9 billion. However, the segment’s growth rate is in a downtrend. The business unit printed gains of 37%, 42% and 46% in the second-quarter, first-quarter and fourth-quarter of last year, respectively.
Lastly, the Seattle-based company gave lower than expected guidance for the final quarter of this year. Amazon reported Q4 revenue guidance between $80 billion and $86.5 billion. Those figures are significantly lower than Wall Street’s expectations of $87.4 billion.
In spite of underwhelming results and forecasts, Amazon remains the favorite S&P 500 stock on Wall Street.
Amazon Receives 97.9% Buy Rating From Wall Street Analysts
The fourth largest company in the world gets the highest buy rating on the Street,