Market Analysis by Antonio Di Giacomo, Financial Markets Analyst for LATAM at XS
February 7, 2025 –
“This Thursday, February 6, 2025, Amazon reported fourth-quarter revenue of $187.8 billion, surpassing analyst’s expectations of $187.33 billion. Additionally, earnings per share were $1.86, well above the expected $1.47. However, despite these strong results, the company’s stock dropped more than 5% after the market closed, surprising many investors.
The main reason for this decline lies in the revenue forecast for the year’s first quarter. Amazon estimated its revenue would range between $151.0 billion and $155.5 billion, below the $158.33 billion expected by analysts. This lower forecast created uncertainty among investors, suggesting a possible growth slowdown amid a challenging economic environment and intense competition in the e-commerce and cloud sectors.
Despite this setback in the stock market, Amazon’s operational performance remains strong. Its North American business grew 10% in revenue, reaching $115.6 billion. Moreover, EBIT margins in the region rose to 8%, significantly improving from the 5.9% recorded in the previous quarter. This indicates that the company is optimizing its operational efficiency and profitability in a key market.
On the other hand, Amazon Web Services (AWS) also experienced notable growth. Its revenue increased by 19%, reaching $28.8 billion, which was in line with market expectations. This segment remains crucial for the company’s profitability, and its cloud expansion continues steadily, solidifying itself as one of Amazon’s most profitable business units.
Another factor that contributed to market caution was the strength of the U.S. dollar. Amazon anticipates this situation will reduce its revenue by approximately $2.1 billion. Given its global reach and dependence on international markets, exchange rate fluctuations can significantly impact the company’s financial results.
In conclusion, the drop in Amazon’s stock price does not necessarily reflect weakness in its financial performance but rather concerns about its short-term outlook.
The company continues to show solid growth in key areas, but investors remain wary of challenges such as slowing growth, the strong dollar, and market competition. As the year progresses, it will be crucial to monitor how the company navigates these challenges and whether it can regain market and shareholder confidence.”
Analysis by Antonio Di Giacomo, Financial Markets Analyst for LATAM at XS