Amazon Earnings Buoy Battered FANG, NASDAQ

Talking Points:

  • The positive report spurred the stock higher in after-hours trading, but Facebook’s plunge may prove infectious
  • Q3 Net sales forecast was 3.9% below estimates, suggesting the company may see storm clouds ahead
  • The report marks the end of Q2 earnings for the FANG group, Amazon and Google the victors

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The ecommerce-giant Amazon reported earnings Thursday evening. In contrast to Facebook the day before, Amazon offered some positive results for the recently troubled FANG group. Falling slightly below forecasted sales, Amazon delivered $52.9 billion versus the $53.41 billion consensus estimate. That said, earnings per share (EPS) grew to $5.07, doubling the $2.47expected. Operating profit climbed to a record $1.34 billion. The positive report moves the company ever closer to a trillion dollar valuation, something yet to be achieved by a public company.

Although the report was largely positive, forecasted sales for Q3 missed analyst expectations by 3%. No reason was given for the modified forecast but it suggests Amazon could begin to see some headwinds encountered by other FANG members Netflix and Facebook. Shares of Amazon initially rallied 4% but subsequently pared some gains, leveling off at 1.8% near $1840.

Amazon Intraday Charge

Amazon Earnings Buoy Battered FANG, NASDAQ

Chart from Marketwatch

As the week approaches its end, all FANG members have released Q2 earnings. The mega-cap, high growth tech companies were split in their performances. Most notable was the unraveling of Facebook, which saw its stock drop nearly 20% due to lower growth and revenue outlooks. Google posted a beat and saw a small rally. Netflix missed and dropped due to lower forecasted growth in users.

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The mixed performances from this speculative favorite tech group fail to offer clear insight on US equities, but after $114 billion was wiped from Facebook’s valuation in a single afternoon, investors may be more wary of holding such a volatile asset class. If uncertainty in the markets rise or trade wars balloon substantially, investors may begin to shift capital to safer positions. As earnings continue, Apple is due next Tuesday after hours. A positive result could propel the company to win the race to a trillion dollar valuation.

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