Amazon (AMZN) Shares Rocket after Earnings Beat

Shares of Amazon.com Inc. (AMZN) were trading up +94.28 or +19.55 percent to $576.46 per share in Friday's premarket after the company announced a surprise profit for its second quarter yesterday after the market close. Amazon stock closed at $482.18 per share, down -6.09 or -1.25 percent in Thursday's regular trading session.



Seattle, Washington based Amazon.com Inc. is the world's largest online retailer.
The company, founded as Cadabra in 1995 by Jeff Bezos was originally started as an online bookstore, but later diversified into DVDs, CDs, software, video games, clothing, toys, food and jewelry. The company also makes consumer electronics products such as the Kindle e-book reader and the Kindle Fire tablet computer. Amazon.com disclosed finances for its Amazon Web Services, the company's cloud computing service for the first time in the last quarter showing outstanding results.

Amazon reported net income of +$92 million, or +$0.19 per share compared to a loss of -$126 million or -$0.27 per share in the same period one year ago. Net sales came in at $23.1 billion versus $19.34 billion in 2014's second quarter, an increase of +20 percent.

Excluding adverse foreign exchange rates and the strength of the U.S. Dollar during the quarter, net sales grew +27 percent versus the previous year's second quarter. The analyst consensus was for the company to report a loss of -$0.15 per share on net sales of $22.5 billion.

Amazon reported operating income of +$464 million in the quarter versus an operating loss of -$15 million in the same quarter last year. Operating cash flow increased to $8.98 billion for the trailing twelve months compared to $5.33 billion for the trailing twelve months ended in June of 2014, an increase of +69 percent. Free cash flow increased to +$4.37 billion for the trailing twelve months versus +$1.04 billion in the same period last year.

Jeff Bezos, founder and Chief Executive Officer for the company stated in a press release that, "The teams at Amazon have been working hard for customers, we unveiled Amazon Business, opened Amazon Mexico, launched Prime free same-day, rolled out our ninth Prime Now city, broke our Black Friday record with the first-ever Prime Day, received 11 Emmy nominations for Transparent, debuted six new kids pilots, brought Echo to general availability, introduced the Alexa Skills Kit and Alexa Voice Service, opened FBA Small and Light, continued to double down on our fastest growing geography India, launched 350 significant AWS features and services so far this year (ahead of last year's pace), introduced AWS Educate, and entered into agreements for new solar and wind farms enough to exceed our 2016 goal of 40% renewable energy.

The big winner for the second consecutive quarter for Amazon was its Amazon Web Services cloud division. The unit delivered a profit of +$391 million based on $1.82 billion in revenue, a +407 percent profit increase from last year and an increase of +81 percent in revenue. So far, the cloud division has provided the company with $3.389 billion in revenue in the first half of the year.

For the company's third quarter 2015 guidance, net sales are expected to be between $23.3 billion and $25.5 billion, or to grow between 13 percent and 24 percent versus the third quarter of 2014. Operating income is expected to be between a loss of -$480 million and a profit of +$70 million compared to a loss of -$544 million in 2014's third quarter.

The market and Amazon investors are showing their enthusiasm with second quarter results. Amazon stock is already up almost $100 per share and will open at a new all-time high after this morning's premarket action.

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Published on Jul 24, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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