Amazon (AMZN) hit a new high today at $75.20, putting it up over 110% for the last year.
Wall St. must think earnings are going to be amazing.
Amazon’s second quarter was mixed last year. Revenue rose 22% to $2.139 billion. But, operating income got hurt, dropping from $104 million in the same quarter the year before to $47 million.
The guilty parties in the drop in operating income were fulfillment costs (shipping) and technology costs. Fulfillment rose 20% and technology expense was up 58%.
What would impress Wall St. For starters, a 30% plus increase like Amazon had in the first quarter. That would mean close to $3 billion. If the company topped Q1’s $3.015 figure, it would be even better.
On the operating income side, Amazon would have to make a huge step forward to satisfy whatever critics are left. In Q1, operating income was $145 million. That number is going to have to be closer to $160 plus if Wall St. is to believe that margins are getting better fast.
With its valuation so high now, it is almost impossible to say what numbers would be satisfying. But, if it is not a fairly big up-tick from Q1 performance, it won’t be pretty.
Douglas A. McIntyre
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