Amazon (NASDAQ:AMZN) share price drops 7% despite growth

Amazon falls on its latest quarter results…

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The Amazon.com, Inc. (NASDAQ: AMZN) share price has fallen in after hours trade following its second-quarter results.

Shares in the e-commerce giant plunged in extended trade, despite reporting sales growth across all segments.  

At the time of writing, shares in Amazon are sitting at US$3,338.92, down 7.2% after hours.

Unpacking this delivery

Sometimes having high expectations can lead to disappointment. This appears to be the case for analysts and Amazon’s quarterly results. Analysts had pencilled in estimates of US$115.20 billion in revenue and US$12.30 in earnings per share (EPS).

While Amazon’s revenue grew by 27% year-over-year (YoY) to US$113.08 billion, it came in under estimates. For comparison, the online mega-company dealt a 41% YoY growth rate in 2020. However, Chief Financial Officer Brian Olsavsky said:

We’re starting to lap that [COVID-19 boosted quarter] and that’s why you see some of the growth rate coming down

Similar to Facebook’s results yesterday, Amazon expects a slowing of growth to continue in the next few quarters due to these difficult periods of comparison. This was likely a heavy dampener on the Amazon share price.

While growth might be momentarily ‘slowing’, the increase in dollar figures is quite impressive considering the company’s large size. For instance, operating income for the quarter increased 32.8% to US$7.7 billion.

Furthermore, subscription and Amazon Web Services sales experienced a 32% and 37% uptick.

The result marks the last of Jeff Bezos being CEO, with the reins now handed over to Andy Jassy. As of 5 July, Bezos has shifted to being executive chairman.

Amazon share price snapshot

The Amazon share price has been more subdued during the past 12 months than it has been at other times in history. The past year has witnessed an 18% appreciation, which fails to outperform the 22.6% return from the S&P/ASX 200 Index (ASX: XJO).

However, on a 5-year timeframe, the Amazon share price has pulled a 370% return for long-term shareholders.

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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. Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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