The retail group has exceeded the expectations of the experts.
(Photo: Reuters)
new York The world’s largest online retailer, Amazon, significantly increased sales in the second quarter despite high inflation and fears of a recession. Revenues increased by seven percent year-on-year to $121.2 billion (119 billion euros), as the group announced on Thursday after the US stock market closed. The bottom line, however, was a minus of two billion because Amazon had to devalue its stake in the electric car manufacturer Rivian again.
Still, investors were enthusiastic about the results because they were well above their expectations. The share price rose more than 10 percent in after-hours trading.
“Amazon has once again exceeded market expectations and has continued to grow despite the general slowdown in the economy,” commented Julian Skelly from the consulting firm Publicis Sapient the quarterly result. This success is not least due to the “stickiness” of the Prime offer and the company’s ever-increasing sales capacities, says Skelly.
“Nevertheless, inflationary pressures and general buying restraint are affecting Amazon,” Skelly notes, noting that growth this time is in single digits, while it’s been more than 10 percent “in almost all of the past 101 quarters.” One has to ask oneself whether this is the right time to increase the prices for Prime subscriptions.
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Growth in this quarter came primarily from the cloud subsidiary AWS, the marketplace for external providers and the advertising business. In its own classic e-commerce business, on the other hand, sales in the second quarter fell by four percent year-on-year to $50.9 billion.
And while the cloud business generated an operating profit of $5.7 billion, the business outside of the lucrative AWS posted a total operating loss of $2.4 billion. Amazon does not show separately how much of this can be traced back to classic online trading.
Despite persistent inflationary pressures in gas, energy and transportation, Amazon is making progress in controlling costs, CEO Andy Jassy said. In particular, productivity in the warehouse and delivery network has been improved. Nevertheless, operating expenses increased by around twelve percent to $ 117.9 billion compared to the previous year.
What made investors optimistic was above all the outlook for the current quarter: Amazon expects revenues of between 125 billion and 130 billion dollars. Earnings, on the other hand, are anywhere from zero to $3.5 billion — significantly down from the $4.9 billion reported in the third quarter of 2021. And down from the most recent quarter — before the Rivian writedowns.
When Rivian went public in November, Amazon’s stake was worth $27 billion. But since then, the online retailer has twice written off its investment in the billions: In the first quarter, Amazon wrote off $7.6 billion and in the second quarter $3.9 billion on the stake, which is now worth just $5 billion.
So far, the write-downs are only paper losses that do not affect Amazon’s cash position. Amazon also wants to use Rivian products itself: It wants to have thousands of Rivian vans on the streets in 100 cities by the end of this year and 100,000 by 2030.
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