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Despite Facing Multiple Headwinds, Amazon Shares Soar Following a Strong Q2

Shares for Amazon climbed 10.36% on Friday, a day after the online retailer’s second-quarter earnings beat and robust third-quarter guidance.

Sales for the three months ended in June grew 7% to $121.23 billion, which was higher than Wall Street’s expected $119.09 billion. It represented Amazon’s third straight quarter of single-digit annual revenue growth.

Looking ahead, Amazon’s third quarter forecast suggested growth could reaccelerate, to between 13% and 17%. The company said it projects revenue this quarter of $125 billion to $130 billion.

This guidance was enough for investors to overlook the reported $2 billion loss in Q2, which Amazon said was due to a multitude of factors including Prime Day happening in Q3 this year and a $3.9 billion loss as a result of a valuation decline for an investment in electric vehicle maker Rivian Automotive Inc, which the retailer started to use for deliveries in the U.S. this year in more than 100 cities. Amazon said it expects to have over 100,000 electric Rivian vehicles making deliveries by 2030.

In a short statement on Thursday, Amazon CEO Andy Jassy said that the company is “making progress on the more controllable costs,” particularly improving its fulfillment network productivity.

CFO Brian Olsavsky echoed the good news on the company’s second quarter earnings call. While speaking to investors, Olsavsky said that the company saw improvement in many of its key operational metrics, including in-stock levels and delivery speed, and saw a subsequent step-up in consumer demand.

Amazon, along with Apple, was among the only tech companies that reported upbeat results in the quarter. Facebook parent Meta, Alphabet and Microsoft all announced disappointing results for the quarter, as decades-high inflation, rising interest rates and other macroeconomic pressures weighed on their businesses.

Other retail and footwear companies felt the same pressures this week. Skechers, Steve Madden, Boot Barn, Columbia Sportswear, Deckers and VF Corporation all reported impacts to their business from macro-economic effects, including recession fears, supply chain slowdowns and inflation, which has led to chilled consumer spending. Adidas and Walmart preemptively lowered their guidance for the quarter in advance of reporting their earnings, citing similar issues.

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