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Amazon Reports $2B Net Loss for Q2 2022

Despite the sizable loss, the company’s quarterly results were better than anticipated.

The second quarter of 2022 was a mixed bag for ecommerce giant Amazon. The company reported net sales of $121.2 billion, a 17% increase year-over-year. However, the company also reported a $2.0 billion net loss for the quarter, or $(0.20) per diluted share, compared to net income of $7.8 billion, or $0.76 per diluted shared for the second quarter of 2021. Amazon lost $3.8 billion in the first quarter of the year. Despite the mixed results, the results were better than anticipated, according to CNBC. Amazon CEO Andy Jassy was optimistic.

“Despite continued inflationary pressures in fuel, energy, and transportation costs, we’re making progress on the more controllable costs we referenced last quarter, particularly improving the productivity of our fulfillment network,” said Jassy in a July 28, 2022 news release.

“We’re also seeing revenue accelerate as we continue to make Prime even better for members, both investing in faster shipping speeds, and adding unique benefits such as free delivery from Grubhub for a year, exclusive access to NFL Thursday Night Football games starting September 15, and releasing the highly anticipated series The Lord of the Rings: The Rings of Power on September 2,” Jassy added.

Quarterly highlights

The second quarter earnings report focused on operational highlights, rather than financial ones.

  • Amazon reiterated that Prime Day 2022 was its most successful to date, with shoppers buying more than 300 million items worldwide, saving over $1.7 billion. This sales event took place in the third quarter, so results will be reflected in third quarter financials.
  • Amazon Prime memberships became more valuable with new discounts, including free one-year memberships to GrubHub+, a year-round discount of 20% on select everyday essentials at Amazon Fresh stores, and other exclusive deals. Prime student members receive six months of a free LinkedIn Premium subscription.
  • Amazon announced the launch of Store Analytics to provide sellers with aggregated and anonymized insights about the performance of products, promotions and ad campaigns in qualifying stores to help inform their business decisions.
  • The company released its second Brand Protection Report to show how Amazon keeps customers, brands and selling partners free of counterfeit products. According to the earnings report, Amazon identified, seized and disposed of more than 3 million counterfeit products.
  • Earlier this month, Amazon filed a lawsuit against 10,000 Facebook group administrators who attempted to organize fake reviews by paying reviewers or giving them free products in exchange for favorable reviews.
  • Amazon Prime Video received 30 Emmy nominations and Amazon-owned MGM received seven nominations.
  • Amazon Prime Video released five new Prime Original series: The Terminal List, The Summer I Turned Pretty, Chloe, The One That Got Away, and Forever Summer: Hamptons.
  • Amazon-owned Freevee, a free, ad-supported streaming service, received a Daytime Emmy for Judy Justice, and it premiered three new Original series: Bosch: Legacy, Troppo, and Hollywood Houselift with Jeff Lewis, and an original film, Love Accidentally.
  • More automakers are launching Alexa integrations into new vehicles including the 2023 Acura Integra, 2023 GM Equinox and 2022 Lucid Air. Other automakers already utilize Alexa integrations, including Audi, BMW, Chrysler, Ford, GM, Jaguar-Land Rover, Jeep, Mahindra, Rivian and Volkswagen.
  • Amazon has more than 1 million registered developers, brands and device makers working on Alexa skills.
  • Delta Air Lines and BT, the largest telecommunications provider in the UK, have selected AWS as its preferred cloud provider.
  • In the first six months of 2022, more than 25,000 employees joined Amazon’s Career Choice program to take advantage of training and educational opportunities.
  • Amazon was named the No. 1 company on LinkedIn’s Top Companies in Retail, and was recognized by the Puget Sound Business Journal as the top corporate philanthropist in Washington State with $96 million in cash donations to more than 180 organizations.
Amazon building in Seattle, Washington, displaying the Amazon logo
Source: Bigstock Photos

Third quarter outlook

Amazon provided the following guidance for the third quarter:

  • Net sales are estimated to be between $125.0 billion and $130.0 billion, representing growth between 13% and 17%.
  • Operating income will be between $0 and $35.0 billion, compared to $4.9 billion in the third quarter of 2021.

Amazon stock

On Wednesday, July 27, the day before Amazon’s earnings were reported, Amazon stock was valued at $120.97 per share. At 4:00 p.m. EDT Friday, July 29, Amazon stock was $134.95 per share, showing an increase in investor confidence.

Amazon's stock value as of 4 p.m. EDT on 7/29/22 was $134.95 per share.
Source: Google

Insider Take

The global economy is a challenging place right now, and companies large and small are feeling the pinch. A few have reported better-than-expected results, however, including Amazon and Netflix. Amazon will be further helped in the third quarter by a boost in sales, thanks to Prime Day, advertising on Thursday Night Football and the highly-anticipated release of The Lord of the Rings: The Rings of Power on Amazon Prime Video. In addition, Amazon is raising Prime prices in Europe by as much as 43%, reports Reuters. All of these factors, and Amazon’s continued belt-tightening, will help Amazon turn the tide of an unpredictable global political and economic climate over which it has little to no control.

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