The Amazon stock price was destroyed after-hours following Q2 earnings, which missed revenue estimates and predicted a miserable third quarter.
Amazon.com Inc (NASDAQ: AMZN) suffered a heavy bout of liquidation after the official session closed as Wall Street digested the firms second-quarter trading update.
Earnings per share (EPS): $15.12 vs. $12.24 expected
Revenue: $113.08 Billion vs. forecast $115.33 Billion.
The headline data showed EPS came in ahead of analyst estimates. However, revenue missed by a wide margin, coming in more than $2 billion below the streets consensus view.
Furthermore, Operating income and online net sales came in below estimates. But the biggest surprise was a 62% fall in free cash flow to $12.146 Billion.
Amazon CEO Brian Olsavsky warned the market that trading conditions would remain challenging in the third quarter.
“Since May 15 — excluding Prime Day — our year-over-year growth rate has dropped into the mid-teens,” he later added. “Our Q3 revenue guidance range of 10% to 16% growth reflects an expected continuation of this trend … While I’m not giving forward guidance beyond Q3 of this year, we do expect this pattern of difficult year-over-year revenue comps to continue for the next few quarters.”
Although, the period of April through June did offer investors some positive news. Net sales at AWS continued to grow and increased by 37% in the three months.
However, on balance, investors were not happy, as is evident in the sharp decline in the Amazon stock price after the release. Furthermore, there are fears the weakness may derail the rally in Nasdaq 100. Following the data r, the Tech index futures are at the time of writing, down 200 points and crucially below 15,000.
AMZN price forecast
Unfortunately, the daily chart does not show the post-market price action. However, the last after-hours trade of $3,331 has pushed the Amazon stock price below the major moving averages.
When the official market closed yesterday at $3,598.40, AMZN was above the 50, 100 and 200-day momentum indicators at $3,589, $3,450, and $3,344, respectively.
However, if Amazon starts today’s session where it left off last night, the price will be below all three.
Furthermore, the reversal has returned AMZN into the horizontal trading pattern defined in the last 12 months.
Until today’s session ends, it will be tricky to provide an Amazon stock price prediction. On that basis, today may prove pivotal. If AMZN reclaims the 200 DMA, you can argue that the long-term uptrend stays intact. However, a failure to hold the support could suggest follow-through selling next week.
Whilst undoubtedly Amazon will remain a favourite amongst investors, it may well offer a cheaper entry point over the next days/weeks.