Amazon’s Prime-Day Change Is a Caution Flag Amid Profit Win
The internet giant's two main businesses — e-commerce and cloud computing — face tough comparisons as pandemic trends lose some steam.
Amazon faces hard comparisons in the second half of the year.
Photographer: Lionel Bonaventure/AFP via Getty Images
Earlier this week, Amazon.com Inc. announced that it would pull forward a pay hike and give more than 500,000 employees an increase of 50 cents to $3 an hour. The timing of the magnanimous gesture just before a big earnings report was curious, with some saying it could be a way for the e-commerce giant to inoculate itself against criticism for another embarrassingly profitable performance. Well, they were right: Late Thursday, Amazon reported first-quarter earnings per share of $15.79, beating the $9.69 Bloomberg consensus. The company’s $108.5 billion of revenue in the quarter was 44% higher than a year earlier. For the current period, Amazon projects revenue growth of 24% to 30%.
It was a strong report for sure, but the results and guidance reflect conditions that likely won’t be repeated. The latest quarter’s earnings were helped by the unprecedented amount of government stimulus payments made in the period. As for guidance, Amazon said in its press release that its annual deals-bonanza Prime Day is now scheduled for the current June quarter instead of the typical July timeframe. This means that without the inclusion of Prime Day, its projections would have been lower. Beyond that, though, there is a bigger problem: second-half comparisons likely won’t have this kind of extra help and so won’t be as easy to beat.