When Amazon.com (AMZN) reported Q1 results, its massive Rivian (RIVN) paper loss and weak
subscription figures spooked markets. The 14.05% drop on April 29, 2022, is the beginning of more risks
ahead for the technology sector.
Amazon posted a net GAAP EPS loss of $7.56. Revenue grew by only 7.3% Y/Y to $116.44 billion. Online
store net sales fell Y/Y. Subscription service revenue grew to $8.41 billion, up from $7.58 billion Y/Y. The
company reported pockets of strength if investors ignore the Rivian loss. For example, AWS grew by
37%. This is higher than the 2021 growth rate. But the rest of the company is performing poorly.
Amazon had two red flags ahead of the stock plunge post-earnings. First, Jeff Bezos left the CEO
position. Second, Amazon padded last quarter’s results with Rivian’s stock gain at around $105 a share.
Amazon Prime is not performing well. Instead of slashing prices or increasing promotions, the company
raised Prime prices. Understandably, Amazon needs the cash flow to pay for big-budget content for its
video unit.
Amazon casts a wide halo on e-commerce. Shopify (SHOP) investors will have trouble justifying the stock
valuation, even after shares fell by 75.8% from the 52-week high. Chewy (CHWY), an online retailer for
pet products, is off by 70% in that time. Etsy (ETSY) is below $100.
Consider small speculations in e-commerce stocks. Avoid taking big bets.
Related Stories
