Daily Brief: Amazon’s Latest Results Tell You A Lot About The World’s Fastest-Growing Industries

Daily Brief: Amazon’s Latest Results Tell You A Lot About The World’s Fastest-Growing Industries

almost 3 years ago3 mins

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Amazon reported better-than-expected results late on Thursday, and investors – who initially pushed its stock up 5% – couldn’t decide how to celebrate first.

What does this mean?

Amazon’s ecommerce business – perfectly placed to benefit from the global rise in stay-at-home shopping – grew its sales by a higher-than-expected 40% in North America and 60% internationally. The working-from-home trend, meanwhile, boosted the company’s cloud computing business, which reported expectation-busting sales that were 32% higher than the same time last year. Put both segments together, and Amazon delivered a quarterly profit that shook off pandemic-driven elevated costs and came in 65% better than expected – as well as a sales growth forecast for this quarter that blew past predictions.

Aftermarket pop

Why should I care?

The bigger picture: Amazon’s a pulse check on big tech.

Amazon’s broad reach tells you a lot about how other companies are getting on too. The company’s better-than-expected performance in ecommerce, for example, bodes well for retail rivals Walmart and Target. The continued momentum of its cloud computing segment, meanwhile, suggests the industry’s still growing quickly – especially alongside Microsoft and Google’s own rapid growth in the area. And as far as its advertising business goes, last quarter’s 70%-plus revenue growth gives weight to recent reports that online ads are surging in a big way.

Amazon revenue by segment

For markets: There’ll soon be more Amazon to go around.

Some investors were also expecting Amazon to announce a “stock split” on Thursday. In other words, every share an investor owns – currently worth around $3,500 each – would be replaced by multiple cheaper shares (say, 10 shares worth $350 each). Companies like Tesla and Apple took that route last year, making it easier for new investors – retail and institutional alike – to buy their shares and give their stocks a boost. Amazon didn’t end up announcing a split on Thursday, but it may happen before too long with a new CEO taking the helm later this year.

Unilever's Better-Than-Expected Results

Unilever image

Unilever’s not going to let a little wrinkle like the pandemic spoil its quarter: the consumer staples company reported better-than-expected earnings on Thursday, and its stock price rose 3%.

What does this mean?

In a world where there’s not much more to do than eat your bodyweight in snacks or moisturize your orifices, it makes sense that food and skincare brands have been two of the biggest lockdown winners. Those segments helped Unilever grow its sales by a better-than-expected 6% compared to the year before, and gave the firm the confidence to predict as much as 5% growth for the rest of 2021. That might come as a surprise considering two of its key markets – India and Brazil – are fighting dramatic surges in coronavirus infections. But it might have something to do with its recent push into two particularly fast-growing areas: plant-based foods and cosmetics.

Unilever sales growth

Why should I care?

For markets: Buybacks are back, baby.

Unilever also took the opportunity to announce that it’s buying back its own shares for the first time since 2018 – almost $4 billion worth. That makes it one of the first consumer companies since the outbreak to restart buybacks, which reduce the number of shares available on the market and boost the prices of those left over. And it’s not the only way Unilever's planning to spend its cash this year: the firm hinted that it’s not averse to a new acquisition if the right opportunity lands in its lap.

The bigger picture: Keep that consumer spending coming.

Unilever’s strong results come just a week after Nestlé’s own better-than-expected earnings, and right alongside McDonald’s expectation-beating update, which saw the fast food chain’s revenue beat even pre-pandemic levels. And what do they all have in common? They all seem to be reaping the rewards of a post-lockdown consumer spending boom – one that shows no signs of letting up.

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