Amazon (NASDAQ: ) reported revenue of $127 billion, close to analysts’ forecast of $127.5 billion. But net income fell to $2.8 billion from $3.1 billion in the second quarter. As revenue fell, so did the stock price. AMZN continues to fall, from $184 in ATH to $96 starting 1 year ago. Is it bottoming out, or is there more bulls than bears this winter?Amazon’s e-commerce is on the rise
U.S. sales rose 20 percent to $78 billion. It looks like Americans who enjoy fast and same-day delivery are gearing up for the Amazon holiday.
Meanwhile, the rest of the world sees messages that say “Currently unavailable” or “This item cannot be sent to the delivery location you selected.” Not surprisingly, international sales fell 5% to $27 billion as delivery delays increased.
Overall, sales have risen. Bullish outlook for online stores. But e-commerce isn’t Amazon’s only source of revenue.
Amazon Web Services is on the rise
Amazon Web Services (AWS), Amazon’s subsidiary that provides cloud services, had $62 billion in revenue last year. AWS growth slowed, but still achieved a very respectable 27% growth.
AWS is a major contributor to Amazon’s massive cash flow, but their growth is directly tied to the technology division, which is now facing layoffs and layoffs to balance the overextended expansion. Future reports may not be so optimistic.
When it comes to business, growth is growth, so expect another bullish outlook for Amazon Web Services.
Push and Pull for Prime Streaming
At its highest ever, more than 170 million people worldwide subscribed to the Amazon Prime Video service, which generated $31 billion in revenue last year.
The streaming giant spent more than $11 billion this year on TV shows, movies and music. Like Netflix (NASDAQ: ), Amazon Prime streaming is tied to its content. When the biggest and most expensive titles fail, subscription numbers take a hit, and subscription revenue suffers.
Amazon’s $1 billion “Lord of the Rings” TV series had a mediocre third quarter, with a 39% Rotten Tomatoes score. Such a failure likely sends a dubious message to investors and subscribers compared to 95% of the movie trilogy.
Unless Amazon can bounce back with a hit new show worth mentioning, Prime viewers may start to wonder if the subscription is still worth it.
Results for streaming services have been mixed. Subscriptions are up, but a billion-dollar failure could weigh heavily on AMZN.
Invincible advertising service
Although companies with similar revenue-generating services reported losses, Amazon’s advertising services grew 25% in the third quarter, compared with about 13% in the second quarter. The ad service generated more than $31 billion in revenue last year and is a significant contributor to Amazon’s cash flow.
Amazon’s ecosystem is huge, and advertising is an internal monopoly. Products that don’t use ads are invisible and gradually forgotten without the help of Amazon Advertising. As long as Amazon has an online store that hopes to sell, there will always be ad revenue. A sustainable bullish outlook for Amazon’s other big revenue stream.
So why did Amazon fall? After all, most revenue streams are profitable and report growth. You don’t need Fibonacci retracements to see correlations. Amazon has no problems. There is nothing to fix. Stock prices simply react to the environment. The economy and economic sentiment are sluggish, currently affecting every company on the planet.
Looking at the big picture, AMZN is at its lowest point in more than two years. real. But that’s also higher than any time between 1997 and 2020. It’s clear why Covid has boosted growth, but it’s never going to last.
Lockdowns are lifted, people turn off TVs and venture out of their homes. Life, markets and AMZN simply returned to almost pre-COVID status. No mystery or conspiracy. The market is full of volatility that prompts short-term equilibrium. Is AMZN a good asset to trade right now?
Amazon remains an amazing service used by 310 million people around the world. AWS cloud services account for 10% of the web hosting industry, and there are still plenty of great viewing options for the 175 million Prime viewers.
Amazon has a huge cash hoard to weather the storm. There’s only one way the Amazon can go, other than an alien invasion or a meteor strike, but the timing of the eventual trend shift isn’t easy.
The rise will not happen in one day. For overnight positions, stop-loss orders and volatility protection are a must, especially if you don’t live in US time. Check out the AMZN chart daily for the next few weeks. The fourth quarter of 2022 is likely to be a happy season for AMZN traders.