Why Amazon.com Is Rising Today
What happened
Shares of Amazon.com (NASDAQ: AMZN) were up 1.9% in morning trading Thursday at 11:03 a.m. as the e-commerce giant prepares to release its first-quarter earnings report after the markets close.
Analysts are expecting double-digit growth from Amazon, with revenue forecast to hit $116.3 billion in the quarter, an 11.3% increase from last year, though profits are expected to tumble 48% to $8.36 per share.
Image source: Amazon.com.
So what
The economy is in rough shape, with gross domestic product collapsing 1.4% in the first quarter compared to the 1% gain economists had been expecting, according to the Bureau of Economic Analysis. The lingering impact of COVID, the supply chain crunch, and the cost of rampant inflation was taking a toll.
Real disposable income fell 2% for the period, while the personal consumption expenditures (PCE) index roared ahead 7%. Even controlling for the volatile categories of food and fuel, the PCE index was 5% higher.
Higher costs and lower disposable income adds a wildcard to Amazon's earnings for the period.
Now what
Amazon.com surprised the market favorably three out of the last four quarters, but the growing recessionary pressures could cause it to miss once again. However, the market seems to believe that won't happen yet.
Even so, shares of the e-commerce giant are down 18% just this month.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
