Shares of Amazon.com, the world’s biggest e-tailer, slid 7% in Friday trading as investors digested disappointing Q2 results that came against tough comparisons from last year and the thought that consumers will return to old brick-and-mortar shopping habits.
In Q2, Amazon declared $113 billion in revenue, up 27% year over year. However, this was a deceleration from the 44% revenue growth in the first quarter of 2021, and was shy of the 29.4% growth that the consensus analyst estimate called for.
But is the market’s response to this worse-than-expected revenue growth an overreaction? Considering how tough of a year-ago comparison Amazon was up against in the quarter, probably. Let’s not forget how the COVID-19 shut down led to Amazon’s massive growth in 2020. By comparison, Amazon’s Q2 2020 revenue soared 40% year-over-year.
Amazon Chief Financial Officer Brian Olsavsky said that he expects “this pattern of difficult year-over-year revenue comps to continue for the next few quarters.”
Investors should take some time to appreciate Amazon’s strong profitability. Net income in the quarter was $7.8 billion, or $15.12 per share. This was up from $10.30 per share in the second quarter of 2020 and easily surpassed analysts’ average forecast for earnings per share of $12.30.
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