Amazon Q1 preview: Where next for Amazon stock?

When will Amazon report Q1 2022 earnings?

Amazon is scheduled to publish first quarter earnings after US markets close on Thursday April 28.

Amazon Q1 earnings preview

Wall Street forecasts Amazon will report a 7.3% year-on-year rise in net sales in the first quarter to $116.4 billion. Operating income – Amazon’s headline earnings measure – is forecast to plunge over 38% from last year to $5.4 billion and analysts are expecting EPS to fall to $8.40 from the $15.79 delivered the year before. This will be thanks to tough comparatives from last year when earnings exploded thanks to a surge in demand for online shopping during the pandemic and because costs are growing at a faster pace than sales.

Tough comparatives will remain a headwind for the remainder of 2022, although they will get easier as the year goes on.

Notably, those forecasts sit at the upper end of Amazon’s guidance to deliver between $112.0 billion to $117.0 billion in sales and operating profit of between $3.0 billion and $6.0 billion in the quarter.

There are concerns that Amazon’s ecommerce platform could see growth and demand suffer this year, not only because it will face tough comparatives but because of the anticipated cutback in consumer spending as they grapple with rising bills and costs. We saw online sales suffer its first decline in years in the last quarter and that is expected to remain the case in the first quarter of 2022. At the same time as demand is waning, costs are surging across the board as Amazon battles against higher expenditure on everything from logistics and transportation to freight and wages, which is threatening profitability.

Total operating expenses were up almost 13% year-on-year in the last quarter, growing at a significantly faster pace than Amazon’s topline. Analysts believe operating expenses will grow over 11% year-on-year in the first quarter to $110.7 billion. As well as rising costs across the supply chain of its ecommerce business, Amazon is seeing double-digit lifts in expenditure on everything from marketing to technology and digital content.

However, Amazon’s diverse business means it does have powerful levers to pull that can counter any weakness in ecommerce. Amazon Web Services – the largest cloud-computing company in the world and also the engine behind Amazon’s profits – continues to grow at pace with analysts forecasting sales will jump over 35% to $18.2 billion in the first quarter – marking an acceleration from the year before. AWS remains the jewel in the Amazon crown. The fact this, alongside other faster-growing parts of the business such as online advertising, also offers significantly higher margins could prove crucial in preserving profitability if margins contract in the ecommerce unit this year.

However, growth in online advertising is grinding lower amid a broader slowdown in the market and there are also concerns that Amazon’s subscription services, spanning from its core Prime service to its audiobook service Audible, could also struggle if people cancel no-obligation services to save money and cutback on spending.

With all this in mind, Amazon is expected to grow revenue by over 14% in 2022 but report a tepid 0.1% rise in EPS as profitability is squeezed, although markets think it can start delivering a far more impressive performance in 2023 (when EPS is forecast to jump over 52%) as tough comparatives fall away.

Where next for AMZN stock?

Amazon shares have been under pressure since November and have proven highly volatile, ranging from as high as $3762 to as low as $2671. The stock last closed at $2921.

The latest leg of the downtrend started late last month and has seen the stock lose over 13% in value and sink below all three moving averages. The bearish RSI, supported by a slight uptick in volumes in the last five days, suggests we could see the stock sink further before rebounding once again.

Notably, the 200-day moving average that proved to be a reliable floor for the stock since the start of the pandemic has collapsed since the start of 2022. That has now been replaced by the 22-month low hit in March of $2720, although $2749 could also prove to be a level of support for the stock going forward.

On the upside, Amazon could swiftly recapture the 50-day sma at $3084 and then the 100-day sma of $3163 once this downtrend reverses, but it needs to move above the 200-day sma at $3296 and breach the 2022-high of $3416 to move above the peak of the latest uptrend and install confidence of a move higher.

How to trade Amazon stock

You can trade Amazon shares with City Index in just four easy steps:

Open a City Index account, or log-in if you’re already a customer.
Search for ‘Amazon’ in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

Or you can try out your trading strategy risk-free by signing up for our Demo Trading Account.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.