Ahead of Amazon (AMZN) reporting 1Q earnings Thursday, April 28, 2022 after markets close, Andrew Wang and Kevin Horner break down their expectations for the FAANG name. Consensus calls for Amazon to report EPS of $8.73 on $117.02B in total revenue, which would represent more than 9% sales growth year-over-year.
PROS:
- Huge CapEx investment into AWS, advertising, fulfillment, and its subscription businesses
- Comps will be easier in May so accelerating growth in e-commerce revenue could be forthcoming
- Higher revenue shift to higher-margin AWS
- Over 200 million Prime members worldwide
CONS:
- Ecommerce has slowed because consumer confidence has been dropping since stimulus checks ended
- Inflation headwinds
- Amazon has had to raise wages to retain talent
- Suspended shipments to Russia and Belarus // Uncertainty in Europe
I think this is a wait and see quarter to gauge how management guides for the full year.
In May and beyond, comparisons get easier and ecommerce growth could accelerate. Until then, it's best to be cautious.
