Amazon shares slide, Apple impresses
Amazon shares fell 9% in extended Wall Street trading last night as disappointing results from the online retail giant halted tech sector momentum from earlier in the day.
The Nasdaq was 3% higher in regular trading but futures markets are today pointing to a weaker start as traders factor in Amazon’s below-par first quarter performance, which included a $3.8 billion (£2.4 billion) net loss. Operating profit fell 58.6% to $3.7 billion (£3 billion).
Projected sales for the current quarter of between $116 billion and $121 billion (£92.7 billion-£96.7 billion) were also behind Wall Street expectations as consumers rein in their spending in the uncertain climate.
Hargreaves Lansdown equity analyst Sophie Lund-Yates said: “Amazon is still a titan, no one can deny that. $116 billion (£92.7 billion) of quarterly sales takes a mighty beast.
“Sadly though, the market isn’t asleep to the fact that Amazon is suffering badly at the hands of economies of scale. The group had to double its capacity to meet demand when the pandemic hit, and as of yet, revenues aren’t keeping pace to keep margins up.
“The focus now is on building scale so that each extra package off the distribution line can contribute meaningfully to group profits. There is no easy fix here. The plan is the right one, but the speed at which margin accretion comes through is a different question entirely.”
Apple’s results got a better reception on Wall Street as the iPhone giant overcame supply chain pressures to report that net sales rose 8.6% in the quarter to $97.3 billion (£77.7 billion).
This was better than the market expected and helped operating profits to hit $30 billion (£24 billion), despite a 19% rise in operating expenses. Its shares were initially higher in after-hours trading but later stood 2% lower.
Despite its 3% rebound yesterday, the Nasdaq is down by about 10% this month after a hammering for growth stocks on the outlook for sharply higher interest rates.
On the back of Thursday’s stronger Wall Street session, IG is forecasting that the FTSE 100 index will open 0.8% higher at 7569.