What's going on?
The Everything Store, Amazon, wasn’t quite everything and more to investors on Thursday – its fourth-quarter results beat expectations, but its stock fell slightly.
What does this mean?
Amazon’s ecommerce revenue was 17% higher than last year, helped by a record-breaking US holiday season. In Europe, stores’ black Christmas was compounded by data on Thursday showing German retail sales fell much more than expected in December. But Amazon’s own international sales exceeded expectations. And its cloud computing division also beat investors’ revenue estimates – like Microsoft’s on Wednesday – helping Amazon’s overall quarterly profit to beat too.
In each of Amazon’s last two quarterly updates, future revenue forecasts came in below expectations. And Amazon’s revenue forecast for this quarter nailed the hat trick, with a strong US dollar partly to blame – although the company’s profit outlook was better than investors had thought.
Why should I care?
For markets: Amazon’s stock initially fell, bucking the recent trend.
According to The Wall Street Journal, over 60% of US companies reporting results in January saw their share prices rise afterwards – including those missing investors’ expectations. That may suggest investors were too pessimistic back in December when they began slashing their forecasts in earnest (tweet this). Analysis from Bank of America shows that the shares of companies reporting stronger-than-expected results beat the market by an average of 3% the next day – the biggest such leap since mid-2012. Amazon’s fall may therefore come as a surprise.
The bigger picture: Setting up health-as-a-service?
Thanks to an ongoing court case relating to alleged theft of trade secrets, fresh details emerged this week of the healthcare venture that Amazon’s working on in partnership with JPMorgan and Berkshire Hathaway. Amazon is currently evaluating potential healthcare options for the combined 1.2 million employees of the three firms. With control of your front door, an established handyman comparison sideline, and an online pharmacy in hand, Amazon Prime Doctors can’t be far away. There are worse business ideas out there…