Amazon Holders Await Word on Sales, Costs, Trump Tirades
Comment of the Day

April 26 2018

Commentary by Eoin Treacy

Amazon Holders Await Word on Sales, Costs, Trump Tirades

This article by Spencer Soper and Gerrit De Vynck for Bloomberg may be of interest to subscribers. Here is a section: Inc. is expected to post a sharp rise in sales when it reports first-quarter earnings Thursday, but investors will be watching to see how much revenue it’s plowing back into its many businesses.

Revenue in the first quarter is estimated to reach $49.9 billion, up 40 percent from a year earlier, thanks in part to a big boost from last year’s acquisition of grocery chain Whole Foods. Analysts project earnings of $1.26 per share, down from $1.48 a year earlier, as Seattle-based Amazon keeps investing in international expansion, data centers for its cloud-computing division, new devices and original programming for video streaming.

Analysts at Stifel Financial Corp. anticipate sales beating estimates, given record consumer sentiment levels and an expanding Prime membership base. Bloomberg Intelligence analysts said Whole Foods’ introduction of free home delivery may lift sales, while demand for the Echo line of smart speakers could help cement Amazon’s market-share dominance.

Eoin Treacy's view

Amazon rallied impressively during today’s session in advance of the earnings announcement not least because of renewed enthusiasm for the technology sector.

As a transactions company Visa broke up out of its short-term range today suggesting continued growth in the number of people using credit cards. That’s positive for a company like Amazon as we look towards the potential for additional growth in its retail business.

From a broader perspective the Nasdaq-100 has now posted another higher reaction low and continues to find support in the region of the trend mean during pullbacks. It’s still a choppy environment but, so far, the corrective phase has been largely limited to a pullback. That’s about as close to the best possible scenario investors might wish for and a sustained move below the trend mean would be required to question that view.

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