Daily Brief: Amazon’s Revenue Growth Falters As The World Opens Up Again

Daily Brief: Amazon’s Revenue Growth Falters As The World Opens Up Again

over 2 years ago3 mins

Mentioned in story

Amazon announced weaker-than-expected quarterly earnings late on Thursday, and the tech giant’s stock fell 5% as the pandemic continues to weigh on the little guys the hardest.

What does this mean?

Amazon’s ecommerce business has done seriously well from the rise of stay-at-home shopping, but that momentum was only ever going to stumble when stores reopened. And right on cue, the segment’s revenue only grew 16% last quarter compared to the same period in 2020 – a significant slowdown from the 44% of the quarter before. On the plus side, at least the working-from-home trend is still going strong despite the loosening of restrictions. That suits Amazon’s cloud computing segment – whose sales grew by a better-than-expected 37% last quarter – just fine.

Amazon earnings

Why should I care?

For markets: If it’s not one thing, it’s another.

In-flux lockdown restrictions are having the most significant impact on Amazon’s share price right now, but something else entirely could be driving its stock before too long. Speculation is rife that Amazon will start accepting bitcoin as a payment method as soon as next year. And if it does, its stock price might start to correlate with the OG crypto’s price – just like it did with Tesla’s.

Zooming out: Is Robinhood a steal?

The arrival of a big-hitter like Amazon onto the crypto market could also drive up trading volumes, which would be good news for commission-free trading apps like Robinhood. And it could certainly do with some: the company made its stock market debut on Thursday at $38 a share – the low end of what it had hoped for. That “only” valued the entire company at $33 billion, and its shareholders – many of whom were customers – were disappointed: Robinhood’s stock fell 8% on its first day of trading.

Robinhood shares slide

Keep reading for our next story...

The US Economy Left Some Growth Behind Last Quarter

GDP image

Fresh data out on Thursday showed the US economy didn’t grow as quickly as it was expected to last quarter, but determined Americans are going to keep giving it their best shop.

What does this mean?

The US economy’s annualized growth of 6.5% looks good on paper, sure, but there were two smudges on Thursday’s update. First, that growth was well below the 8.4% investors were expecting. And second, it was barely any improvement on the first quarter’s 6.3%, even though lockdown restrictions have kept easing. You can’t sell what you don’t have, after all, and supply shortages mean there’s a lot the US doesn’t have.

US GDP

But you can’t fault American shoppers: they’re doing their best to stimulate the biggest part of the US economy, personal consumption, which grew at an annualized rate of 11.8% – its second-biggest gain since 1952. Clearly government stimulus checks and rapid job growth are working wonders…

Contributions
Source: The Wall Street Journal

Why should I care?

For markets: The Fed isn’t going anywhere.

Bad news for the economy could spell good news for markets, which might be why US stocks actually rose on Thursday. Weak data means the US Federal Reserve (the Fed) is more likely to stick to the support measures – near-zero interest rates and monthly bond purchases – that have been propping up markets so far. The Fed’s admitted as much, saying as recently as this week that there’s a lot of progress to be made before it thinks about stepping back.

The bigger picture: A boost in waiting.

The US president’s ambitious economic plans got a big push forward this week after the US senate approved a $550 billion infrastructure deal. That’s less than the proposed $2 trillion-plus, but anything is better than nothing after the deal looked like it might trip at the final hurdle. The new spending will focus on projects like roads and bridges, as well as on expanding high-speed internet and green infrastructure projects.

Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG