Earnings Week Recap + Amazon Earnings Blowout
It’s been an action-packed earnings week, and the news hasn’t let up today: today, Amazon (NASDAQ:AMZN) issued an absolutely gangbusters earnings report. At least one prominent analyst called the results the “best quarter ever” (by any company, all-time). We detail Amazon’s earnings report below and recap our coverage of the week.
And yet, we’re seeing the complex dynamics that have ruled the week continue: huge profit numbers aren’t generating a true bull run. Today, markets opened up nicely but promptly began giving up their gains. Major indexes are fighting to stay just above zero at the time of this writing. Stellar corporate earnings are dueling with macroeconomic data indicating some underlying trouble. Nevertheless, consumer sentiment remains strongly positive, and volatility looks to be the rule for the foreseeable future.
It’s hard to find negatives in today’s earnings report from Amazon. Amazon Web Services continue to operate as an huge cash generator, with revenues up 49% for the first quarter. This rich cash flow continues to allow Amazon to rapidly expand in lower-margin lines of business without stretching their finances. AWS now constitutes 11% of Amazon’s overall revenue, and an even higher share of profits.
Investors poured into the stock on the news, driving post-announcement gains over 8.5%. The stock has since pulled back to gains around 3.4% at the time of this writing.
This behavior has been common this week: we covered Alphabet’s earnings results on Tuesday. (NASDAQ:GOOGL) Their stock also jumped on sound earnings news before pulling back. In this volatile environment, shorter hold-times with pre-targeted sell-points at conservatively targeted price levels may be the safest approach. We discussed some core choices for earnings-based traders in yesterday’s blog post.
Facebook’s earnings, which we covered Wednesday, didn’t hold to the trend (NASDAQ:FB). More aggressive traders have been rewarded, with FB holding onto post-earnings news gains over 8%.
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