The reigning titan of online retail, Amazon.com, Inc. (AMZN), has weathered challenging times marked by layoffs and uncertainties in its cloud computing division. However, the global e-commerce giant has seen a promising resurgence with vigorous second-quarter results and an optimistic future prognosis.
AMZN’s strategy of prioritizing cost-effective delivery and time efficiency has shown commendable results. Its net sales for the second quarter witnessed an 11% year-over-year increase, escalating to $134.4 billion.
This value outpaced analyst predictions, which estimated sales reaching $131.5 billion. Moreover, the reported quarterly net income of $6.75 billion nearly doubled expectations set by analysts.
Nonetheless, AMZN’s path ahead is not without potential legal hurdles. The U.S. Federal Trade Commission (FTC) may file a lawsuit later this month against AMZN after it did not offer concessions to settle antitrust claims.
The lawsuit is expected to target the company’s logistics division and might suggest “structural remedies” that could break the company. Such developments can exert downward pressure on Amazon’s share price.
In light of these factors, it seems prudent to scrutinize AMZN’s key financial trends more closely and consider waiting for a more favorable entry point into the stock.
Amazon’s Financial Performance: A Detailed Overview from 2020 to 2023
The trailing-12-month net income of AMZN, measured over the given time period from September 30, 2020, until June 30, 2023, exhibits a distinct cycle of upward and downward trends.
- Starting at $17.38 billion on September 30, 2020, AMZN’s net income began an initial surge, reaching up to $33.36 billion as of December 31, 2021. During this period, we note significant growth of approximately 92%.
- However, the gradual increase was followed by a rather steep decline in the first half of 2022. By June that year, the net income had diminished to $11.61 billion. Towards the end of 2022, there was a surprising dip below the zero line, with a reported net income of -$2.72 billion on December 31, 2022.
- As we move further into 2023, the figures show an impressive recovery from the previous year’s deficit. By March 31, 2023, the net income had rebounded to $4.29 billion and continued its growth to reach $13.07 billion in June 2023.
Thus, over the course of almost three years, despite some fluctuations and a brief period of loss in 2022, the overall trend for AMZN’s net income can be seen as positive, with increased recovery and growth, particularly in 2023.
The trailing-12-month revenue of AMZN has been experiencing an upward trend over the three-year period from September 2020 to June 2023. Here is a summarized trend of the fluctuations in revenue:
- Revenue rose from $347.94 billion in September 2020 to $386.06 billion by the end of December 2020.
- In the first quarter of 2021, the revenue grew to $419.13 billion and further increased to $457.97 billion by the end of September 2021.
- By the end of 2021, AMZN’s revenue reached $469.82 billion, with a slight increase in the first quarter of 2022 to $477.75 billion.
- There was steady growth throughout 2022, ending with a revenue of $513.98 billion in December.
- The first half of 2023 saw a notable increase in the company’s revenue from $524.89 billion in the first quarter to $538.05 billion by the end of June.
In terms of growth rates, in these three years, AMZN’s revenue showed a significant increase of nearly $190.11 billion, growing from an initial value of $347.94 billion in September 2020 to $538.05 billion by the end of June 2023.
This represents a cumulative growth rate of approximately 54.6% over the three-year period. Emphasis on the latest data reveals that AMZN’s revenue kept sustaining growth with increments observed in every quarter leading up to June 2023, with the final reported revenue reaching its zenith at $538.05 billion.
The following summary outlines the trend and fluctuations of the gross margin for AMZN:
- The gross margin was 40.2% as of September 30, 2020.
- It decreased slightly to 39.6% by the end of year 2020.
- In 2021, the gross margin saw minor fluctuations, with values typically around 40% in the first half but gradually increased to 42% by the end of the year.
- The upward trend in gross margin significantly continued through 2022, with an increase from 42.1% at the end of the first quarter to 43.8% by the end of the year.
- As per the latest reported data, the gross margin saw a further increase in 2023, reaching 44.7% in the first quarter and 45.5% in the second quarter.
In terms of the growth rate calculated from the first value to the last value in the series, there was an increase of around 13.2%. This suggests a positive overall trend for AMZN’s gross margin over the given period.
Greater attention was paid to more recent data and the last value in the series (i.e., 45.5%), which represents a significant increase as compared to the starting value in the series (i.e., 40.2%).
The observed trend and fluctuations in the Return On Assets (ROA) of AMZN from September 2020 to June 2023 can be summarized as follows:
- Starting at 0.07 in September 2020, the ROA experienced a gradual increase, peaking at 0.092 by June 2021.
- Following this, there were significant fluctuations in the data, with the ROA falling sharply to 0.028 by June 2022.
- The most startling dip was witnessed by the end of the year 2022, where the value dropped to -0.006, marking the first instance of negative growth.
- However, starting from the beginning of 2023, there was a slight recovery, with the last recorded value being 0.029 in June 2023.
Taking the initial value (September 2020) and the last value (June 2023) into account, the calculated growth rate over this period is approximately -58%. The ROA measurements represent the profitability of the company in relation to its total assets and provide insights into how effectively the company’s management is utilizing those assets.
For AMZN, the observed fluctuations could indicate changes in strategic direction or the impact of varying market conditions during specific periods.
Six-Month Steady and Positive Growth Trend for Amazon.com Inc. Shares
Analyzing the provided data, the share price of AMZN over a span of six months from March 2023 to September 2023 shows a steady and positive trend in growth:
- March 17, 2023: The share price starts at $99.15.
- March 24 – 31, 2023: A minor fluctuation is seen initially, dipping to $98.79 and then rising back to $100.05.
- April 2023: Throughout April, the value increases from $102.14 to a peak of $106.57.
- May 2023: The price dropped at the start of May to $104.04 but steadily rose with accelerating growth, reaching $116.40 by the end of the month.
- June 2023: This trend continues in June, with the share price reaching as high as $129.15.
- July 2023: In July, the pace of growth seems to modestly slow down, causing the share price to hover around $131.03 toward the middle of the month and drop slightly to $129.67 toward the end of the month.
- August 2023: The share price makes a considerable leap again, peaking at $139.23, but falls back to $133.88 by the end of August.
- September 1-8, 2023: A very subtle upward trend is visible in the first week of September, with the share price reaching $136.79.
- September 11, 2023: A noticeable spike is seen in mid-September, with the price rising to $143.10.
In general, there is a clearly visible upward trend in the share price of AMZN from March 2023 to September 2023. The growth rate appears to be accelerating, especially from May 2023 onwards, albeit with minor periodic drops. Here is a chart of AMZN’s price over the past 180 days.
Analyzing Amazon’s POWR Ratings: Tracking Growth, Quality, and Sentiment Trends in 2023
The POWR Ratings grade of AMZN, a company categorized under Internet stocks, has shown some fluctuation throughout the weeks from March 18, 2023, to September 9, 2023. The analysis is based on the data of 60 total stocks in this category. Here are some noteworthy points:
- The POWR grade ranged from C (Neutral) to B (Buy).
- For roughly six months, from March 18, 2023, to August 5, 2023, AMZN consistently held a POWR grade of C (Neutral).
- On August 9, 2023, AMZN’s POWR grade increased to B (Buy), indicating some improvement.
- However, for the week of August 19, 2023, the POWR grade reverted back to C (Neutral).
- From September 2, 2023, the POWR grade again improved to B (Buy).
- AMZN’s rank within the category also oscillated between #14 and #25. Lower rank values denote superior position, so AMZN seemed to improve over time.
As of September 12, 2023, AMZN’s POWR grade was C (Neutral). Its rank within the Internet stocks category at this time is #16.
Among the POWR Ratings for AMZN, the three most noteworthy dimensions are Growth, Quality, and Sentiment.
For the Growth dimension:
- It received a high rating of 80 in March 2023.
- The rating increased to 81 one month later, in April 2023.
- There was a substantial increase to 87 in May 2023 before it slightly dropped to 86 in the following two months, June and July.
- In August and September, there was a decrease in the growth rating to 75 and 74, respectively.
As for the Quality dimension:
- Amazon had a notable quality rating of 81 in March and April 2023.
- This rating slightly dropped to 79 in the next two months, till June.
- A significant rise can be seen in August and September, with ratings of 84 and 85, respectively.
Finally, in terms of Sentiment:
- The Sentiment dimension was only 46 in March 2023.
- The rating moderately increased by April to 52.
- There was a momentous increase in May and June, with values of 97 and 99, respectively.
- The sentiment remained steadily high in the following months, with a minor drop to 95 in July, then back to 99 through August and September.
From the above-discussed data, it is evident that the Sentiment about AMZN underwent a considerable positive shift between March 2023 and September 2023. The Quality dimension also demonstrated consistent strength. While the Growth dimension exhibited some fluctuations, it generally trended at an elevated level.
How does Amazon.com Inc. (AMZN) Stack Up Against its Peers?
Other stocks in the Internet sector that may be worth considering are Yelp Inc. (YELP), Travelzoo (TZOO), and Despegar.com Corp. (DESP) – they have better POWR Ratings. Click here to explore other stocks in the Internet sector.
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AMZN shares were trading at $141.58 per share on Tuesday afternoon, down $1.52 (-1.06%). Year-to-date, AMZN has gained 68.55%, versus a 17.90% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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