Amazon Results: The Good, the Bad, and the Ugly

For most of 2022, e-commerce stocks slumped. Shopify (SHOP) scared investors away from
(AMZN) after it posted poor results. Shopify admitted it hired too many staff when the market did not

The Good

Amazon posted revenue rising by 7.2% Y/Y to $121.2 billion. It lost 20 cents in EPS. In Q3, net sales are
expected to be between $125 billion to $130 billion. This is 13% - 17% higher than last year. It will report
operating income of up to $3.5 billion. This is below the $4.9 billion earned last year.

The Bad

Amazon’s results have some concerning weaknesses. Operating cash flow fell by 40% to $35.6 billion in a
trailing 12-month period. FCF fell to an outflow of $23.5 billion. If the recession continues, revenue
growth will decelerate. Fortunately, stagflation is unlikely. Markets are confident that Amazon will post
improving profit margins and will sustain operating cash flow.

The Ugly

Amazon’s income outlook is vague. $0 to $3.5 billion could mean anything. The company will adjust its
research and development expenditures. Under weak market conditions, R&D spending will fall. As the
economy rebounds and e-commerce sales rise, Amazon will increase its investments to ensure future