Amazon Slides 7% After Q3 Miss; Free Cash Flow Turns Negative $42.4B
AMZN sits 15% above its 52-week low of $196 on elevated volume (2.3× avg).
Summary
Amazon missed on the top and bottom line: revenue of $201.94 billion came in under the $202.31 billion estimate and EPS of $1.89 fell short of $1.96. Advertising, normally a profit engine, brought in $19.64 billion versus $20.82 billion expected, and core online sales grew just 2%. AWS was the lone bright spot at $45.98 billion, up 39% and slightly ahead of estimates. The bigger problem is cash: capex of $77.3 billion in the quarter against $58.7 billion expected pushed trailing free cash flow to negative $42.4 billion, versus positive $7.6 billion a year ago, with full-year capex held at $220 billion. Q4 revenue guidance of $240-247 billion has a midpoint below the $244.5 billion consensus, and the stock fell 7.3% after hours to $225.99 after already losing 4.5% in the regular session. This follows the 8-K filed at 20:05 ET confirming the record 13.9% operating margin and 39% AWS growth alongside the cash flow deterioration. Andy Jassy is guiding AWS to 40%-plus growth next year and a $1 trillion revenue business in five to 10 years, but the market is currently pricing the spending, not the cloud growth.
At the time of this announcement, AMZN was trading at $225.99 on NASDAQ in the Trade & Services sector, with a market capitalization of approximately $2.6T. The 52-week trading range was $196.00 to $287.20. This news item was assessed with negative market sentiment and an importance score of 9 out of 10. Source: CNBC TV18.