Market Analysis

Amazon posts strong Q4 number but lowers sales forecasts

Online retail giant Amazon posted better than expected fourth-quarter results on Thursday but lowered its guidance for the first three months of 2019, amidst concerns about slowing global growth. Amazon’s share price fell by nearly 5 percent in after-hours trading, as investors looked past the solid fourth-quarter report and focused on the companies warning of slowing global sales.

Amazon also warned that it was going to spend more money in 2019 than in 2018, as the company plans to invest in new staff and technologies. Increased spending this year from Amazon is seen as a way to address online competition from U.S rivals Target and Walmart, who recently announced plans to invest heavily in their growing online businesses.

The companies total 2018 profit topped $10 billion, while fourth quarter earnings per share for came in at $6.04, which was much better than the $5.68 forecasted, while the online retailer posted revenues of $72.4 billion in the fourth fiscal quarter, beating estimates of $71.9 billion.

Amazon generated $3 billion in net income, which was an increase of sixty-six percent from last year, the company finished 2018 with $232.9 billion in annual revenue. The companies cloud computing arm, Amazon Web Services or AWS provided two-thirds of the firm’s profits during the four-quarter,

AWS includes cloud, third-party sellers services, and advertising is seen as a key part of Amazon’s business model as it delivers better profit margins than its core online sales business, which is known for its high volume sales turnover and tight profit margins.

The online retailer said that North American sales increased by eighteen percent year-on-year, while its international sales increased fifteen percent year-on-year.


Amazon Daily Candlestick Chart | Source: Activtrader Platform

Amazon Daily Candlestick Chart | Source: ActivTrader Platform


Amazon’s stock price is expected to open on Nasdaq around the 1,600 level on Friday after closing the month above the 1,700 level. The company still has a market cap of close to $850 billion and is the largest of any publicly traded company in the world and has over 250,000 employees globally.

Looking at the technicals for Amazon, we are likely to see the stock test towards its 50-day moving average on the first trading day of February. Bulls need to defend this key area or the stock may slump towards the 1,500 area for another test of buying demand.


Written by Nathan Batchelor, External Analyst


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