Amazon After Hours Stock Price Flirts With $120 as Q4 Earnings Impress

By Matthew Frankel, CFP®

February 2, 2023

Amazon.com (NASDAQ: AMZN) stock jumped 4% in after-hours trading on Thursday, Feb. 2, following the release of its fourth-quarter 2022 earnings results. The company beat Wall Street's estimates on both the top and bottom lines, and its guidance for the current quarter was encouraging as well.

Q4 Earnings Results

• Revenue: $149.2 billion, up 9% year over year (YOY) and $9.6 billion higher than the average analyst estimate
• Net income: $2.7 billion, down 98% YOY but $0.29 per share higher than expected
• Earnings per share (EPS): $0.31, down 93% YOY but $0.17 higher than expected

Amazon's revenue growth was slower than in the previous quarter, but it was still impressive considering the tough macroeconomic environment. The company's net income and EPS declined sharply, but that was largely due to a one-time charge related to its Rivian investment.

Segment Performance

• Online Stores: Revenue increased 9% YOY to $64.7 billion, driven by growth in the North American and international markets.
• Amazon Web Services (AWS): Revenue increased 20% YOY to $21.4 billion, continuing its strong growth trajectory.
• Advertising: Revenue increased 19% YOY to $11.6 billion, as Amazon continues to expand its advertising business.

Guidance

For the first quarter of 2023, Amazon expects revenue to grow between 4% and 8% YOY to $121 billion to $126 billion, with an EPS of between $0.15 and $0.35. This guidance was generally in line with analysts' expectations.

Analyst Commentary

Analysts were generally positive on Amazon's fourth-quarter results.

• Bank of America: "Amazon's results were a beat on the top and bottom lines, and its guidance was encouraging. We believe the stock is undervalued at current levels."
• JPMorgan: "Amazon's cloud business continues to grow strongly, and we believe it has a lot of room for growth in the years to come. We maintain our overweight rating on the stock."
• Morgan Stanley: "Amazon's results show that it is still a dominant force in e-commerce. We believe the stock is a buy for long-term investors."

Conclusion

Amazon's fourth-quarter earnings results were solid, and its guidance for the current quarter was encouraging. The company is still facing some challenges, but it is well-positioned to continue growing in the years to come. Investors looking for a long-term investment opportunity may want to consider adding Amazon to their portfolios.

Additional Information

• Amazon's market capitalization is approximately $1.1 trillion.
• The company has a trailing price-to-earnings (P/E) ratio of 102.
• Amazon's dividend yield is 0.10%.

Table 1: Amazon's Key Financial Metrics

Table 2: Amazon's Revenue by Segment

Table 3: Amazon's Guidance for Q1 2023