Amazon is expected to post a loss in the third quarter when it reports its financial results after the market closes Thursday, but some analysts say that could have little or no effect on its stock price
The consensus earnings estimate for Amazon is a net loss of $0.13 per share on $24.91 billion in revenue as polled by Thomson Reuters.
That compares to a loss of $0.95 in earnings per share on $20.57 billion in revenue a year ago this quarter.
The stock was down 0.9% in trading Wednesday.
Most analysts aren’t expecting many changes for Amazon from last quarter.
“More or less I think we’re going to continue to see a lot of the same,” said Jason Moser, an analyst with the Motley Fool.
Amazon continues to focus its efforts on e-commerce operations and growing the top line, he said.
The third quarter earnings report should include some information about Prime Day, Amazon’s 24-hour sale in July.
“It will be interesting to see what the numbers are,” said Sucharita Mulpuru-Kodali, a principal analyst with Forrester Research.
All eyes will also be on Amazon’s forecast for the crucial holiday shopping season, which could be a difficult one.
“There are a whole lot of companies that have been saying it could be soft. Walmart said it would be ‘fine,’ which usually means un-extraordinary. It will be interesting to hear what Amazon has to say,” said Mulpuru-Kodali.
Amazon's holiday forecast could indicate whether the softness is systemic or something else, say analysts.
Roughly one-third of all U.S. e-commerce sales pass through Amazon’s site, of which about 60% are through third party sellers on Amazon’s Marketplace, said Scot Wingo, Executive Chairman of ChannelAdvisor, an e-commerce software and analysis company.
If the online retailer says it, too, is seeing weakness in holiday sales, that could mean there's an overall market weakness, said Wingo.
But if Amazon says it has a good feeling about the coming season, “that makes you think, so Walmart, Macy's and others, do they have a macro problem, or an Amazon problem?” he wondered.
Overall, Amazon sales are up sharply. ChannelAdvisors data suggests that for the third quarter, Amazon sales were up 25% as compared to the third quarter of last year.
Retail e-commerce overall grew about 15% in the same time period while brick and mortar retail sales were somewhere between 3% and 5%, he said.
“They’re taking share from everybody,” he said.
Investors will also be looking at how Amazon Web Services, Amazon's cloud computing business, is doing.
Last quarter AWS made up 8% of total revenue but upwards of 36% of total operating profits, said John Divine, an editor at InvestorPlace.com.
It was only in January the company began reporting separate earnings for this highly profitable group. In the second quarter of 2015, its earnings were $1.82 billion.
The release of the AWS figures helped investors "reset" their patience with lack of profits, said Moser.
“Every once in while, Amazon will throw investors a bone,” he said.
As always, Amazon CEO Jeff Bezos faces the challenge of convincing investors to think as long-term as he does, rather than demanding immediate profits.
“If an alien came to Earth and looked at Amazon.com, and asked ‘Why is this stock worth what it is?, we’d have to say it’s due to its potential to show a profit,” said Divine.
The prospect at times seems tantalizingly close and Amazon is making decisions that bode well. One example Divine gave was the closing, after just six months, of Amazon Destinations, its travel site.
“They got in, scoped it out and got out,” he said.
Mulpuru-Kodali doesn’t expect the stock price to fall no much, no matter what Amazon’s actual numbers are.
People who believe in Amazon believe in Amazon. “If you’re holding on to Amazon stock now, you’re going to hold on no matter what. It’s a kind of selection bias,” she said.
Amazon remains “in a class by themselves, they’re valued like a start up even though they’re not one,” she said.
