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Amazon.com, Inc guidance disappoints and shares crash lower in after hours trade

A disappointing third quarter results release from Amazon.com, Inc is threatening to undo the positive rebound made by the Nasdaq overnight.

The U.S. tech index rose a solid 2.95% on Thursday night thanks to strong rises across all FAANG stocks.

Amazon was the best performer in the group with a 7% gain but has now given back this gain and more in after hours trade.

At the time of writing the Amazon share price is down 9% and the rest of the FAANGs have also given back all of Thursday night’s gains.

What did Amazon report?

In the third quarter Amazon posted earnings per share of US$5.75 on revenue of US$56.6 billion.

This was a 29% increase in revenue on the prior corresponding period and driven largely by its North American and Amazon Web Services businesses.

The company’s Amazon Web Services business was the star of the show again, delivering a 46% lift in revenue to US$6.7 billion. Not far behind was its North American core business which saw sales rise 35% to US$34.3 billion.

Its International business isn’t performing quite as well. It saw sales growth of just 13% to US$15.5 billion during the period.

Why are its shares falling?

While its revenue fell a touch short of expectations, it was its guidance for the fourth quarter that had investors heading to the exits.

According to CNBC, fourth quarter revenue guidance of between US$66.5 billion and US$72.5 billion is well short of the consensus estimate of US$73.79 billion.

Operating income guidance of between US$2.1 billion and US$3.6 billion also fell short of US$3.9 billion forecasts.

What now?

At the time of writing the Australian share market is still expected to open the day higher with current SPI futures pointing to a 1.3% gain at the opening bell.

But given the state of after hours trading amongst the FAANG stocks, I wouldn’t be overly surprised if the likes of Afterpay Touch Group Ltd (ASX: APT) and Kogan.com Ltd (ASX: KGN) ended up trading lower today.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Amazon and Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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