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Amazon Posts $108.5 Billion In Sales, Smashing Expectations In Best First Quarter Ever

Topline

Ecommerce juggernaut Amazon reported its best first-quarter sales ever Thursday after the market closed, beating out analyst expectations and tacking on to a slew of recent blockbuster reports from big-tech giants as stocks climb to new highs.

Key Facts

Seattle-based Amazon reported revenue of $108.5 billion in the first quarter, surging 44% year over year and beating out analyst expectations of $104.5 billion.

Boosted by stimulus checks and improving sales of Amazon Web Services (AWS), net income hit $15.79 per share, or roughly $8.1 billion—eclipsing expectations of $9.54 per share and more than tripling from $2.5 billion one year ago.

The release marks Amazon’s second-biggest quarter ever for sales, behind only the $125.6 billion nabbed in last year’s fourth quarter thanks to a later-than-usual Prime Day and the pandemic holiday season.

Amazon shares jumped 5% in after-hours trading immediately after the announcement; the stock ticked up 0.4% Thursday, lifting its year-to-date gain to about 9%—lower than the tech-heavy Nasdaq’s 11% increase.

Crucial Quote 

“In just 15 years, AWS has become a $54 billion annual sales… business competing against the world’s largest technology companies, and its growth is accelerating—up 32% year over year,” Amazon Founder and CEO Jeff Bezos said in the earnings release, touting the fast-growing segment that analysts expect will drive the bulk of Amazon’s future growth. “Companies from Airbnb to McDonald’s to Volkswagen come to AWS because we offer what is by far the broadest set of tools and services available, and we continue to invent relentlessly on their behalf.”

Key Background

Now worth an estimated $202 billion, Jeff Bezos started Amazon as an online bookseller operating out of his Seattle garage in 1994, and the company has since grown to become one of the world’s most valuable companies with businesses spanning cloud storage, video streaming, groceries and more. Last year, about 56% of Amazon’s $386 billion in total sales came from products sold on the platform, while the rest came from services like AWS, Amazon Prime and advertising. In February, Amazon announced Bezos would step down as CEO in the third quarter after 27 years at the company’s helm, ceding the position to AWS CEO Andy Jassy—a sign the company could double-down on its quickly growing service offerings.

What To Watch For

Amazon’s first-quarter earnings call is at 5:30 p.m. EDT Thursday. Forte says he’ll be listening for details on “heir apparent” Jassy’s leadership transition, potential government regulation, the Alabama vote against unionization and costs incurred as a result of the Covid-19 pandemic.

Big Number

$3,993. That’s how high analysts think Amazon shares can go over the next year, according to Bloomberg data, implying that the stock could soar about 14% from current prices of about $3,474.

Surprising Fact

A booming pandemic rally helped Amazon shares nearly double since the start of last year, creating the nation’s third-largest company with a market capitalization of nearly $1.8 trillion.

Tangent

“Last year, Amazon lost sales to competition—including Walmart, Target, eBay and others—because it couldn’t keep up with demand, and it made a strategic decision to emphasize essentials during the start of the pandemic,” Tom Forte, a senior research analyst at investment bank D.A. Davidson said in a pre-earnings note. “Since then, it has ramped up staffing and fulfillment-center square footage and, in our view, is better positioned to recapture those sales.” 

Further Reading

Earnings Preview: What To Expect From Amazon On Thursday View Article (Forbes)

Jeff Bezos To Step Down As Amazon CEO (Forbes)

Jeff Bezos Is Once Again Worth A Staggering $200 Billion (Forbes)

Amazon to hike wages for over 500,000 workers (CNBC)

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