Amazon Posts First Quarterly Loss since 2015, Weighed by Rivian

  • AMZN.us
    (${instrument.percentChange}%)

First Net Loss Since 2015

The e-commerce and tech juggernaut reported underwhelming results for the first quarter of 2022 [1] and markets reacted negatively, sending the stock lower in extended trading. CEO Andy Jassy noted that "The pandemic and subsequent war in Ukraine have brought unusual growth and challenges".

The report had a lot to unpack, but one of the metrics that stood out, was the disclosure of the first quarterly loss in seven years. Amazon (AMZN) announced a hefty Net Loss of $3.844 billion in Q1 2022, compared to profits of $8.107 billion in the same quarter a year ago and $14.323 in Q4 2021.

One key driver for this, was the loss of $7.6 billion from the firm's stake electric vehicle (EV) startup Rivian Automotive. The EV maker went public in late 2021 and its stock shed around 50% in the first quarter of the current year.

Another backer (and competitor) of Rivian, whose income was affected by this, is the Ford Motor Company. Ford revealed yesterday, that it had lost $5.4 billion form its investment in Rivian, in the first quarter of the year. [2]

Revenues Grew, Margins Squeezed

Amazon.com reported Total Net Sales of $ 116,444 billion for the first quarter of 2022, which was 7% higher compared to the same period last year, but constituted a significant mark down from the $137.412 billion generated in the last quarter of 2022.

Trade the News: View our Economic Calendar

In a backdrop of surging inflation in the US, the rise in energy and commodity prices and higher interest rates ahead, margins are an important figure, since they show how much money a firm actually form its Revenues.

The retail giant saw its Operating Margin dive to 3.2% during the reported period, from 8.2% margin of Q1 2021, but was improved compared the prior quarter's 2.5% print.

Strong Web Services and Advertising

Amazon Web Services (AWS) is a key part of the firm's activities, which became even more significant during the COVID-19 lockdowns, as corporations faced increased needs for cloud solutions.

The segment has been expanding and yesterday's report showed a continuation of this trend, as AWS posted a solid 37% Revenue growth year-over-year in Q1 and generated $18.441 billion, also surpassing the Q4 2021 figures. More to it, Web Services brought in $20.887 billion of Income, a 57% year-over-year jump.

Another important source of revenue for Amazon.com, is the advertising business, figures for which it only started reporting in the last quarter, having revealed Revenue of 9,716 billion. In Q1 Advertising Revenues slipped to $7,877 billion in Q1 2022, but they constituted a strong 23% increase year-over-year.

Forward Guidance & Prime Day

The tech juggernaut offered a rather timid forward guidance for the second quarter of the year, given various source of uncertainty, such Covid-19, the war in Ukraine and supply challenges.

Amazon projects Net Revenue to be between $116.0 billion and $121.0 billion, which would constitute a 3%-7% year-over-year growth. Operating income (loss) is expected to be between $(1.0) billion and $3.0 billion, compared with $7.7 billion in second quarter 2021.

Amazon also announced that its popular 48-hour sale event, the Prime Day, will take place in July, meaning in the third quarter of the year. This has been factored in to the above projection, since last year, Prime Day had been held during the second quarter, a change that can affect year-over-year comparisons.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 29 Apr 2022 https://s2.q4cdn.com/299287126/files/doc_financials/2022/q1/Q1-2022-Amazon-Earnings-Release.pdf

2

Retrieved 18 May 2022 https://s23.q4cdn.com/799033206/files/doc_financials/2022/q1/PRESS-RELEASE-Q1-2022.pdf

Disclosure
*

When executing customers' trades, FXCM can be compensated in several ways, which include, but are not limited to: spreads, charging commissions at the open and close of a trade, and adding a mark-up to rollover, etc. Commission-based pricing is applicable to Active Trader account types.

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}