What To Expect After Amazon.Com Earnings

Amazon.Com Inc. (AMZN) reports Q2 2020 earnings after Thursday’s closing bell in the United States, with Wall Street analysts looking for the e-commerce behemoth to report $1.62 earnings-per-share (EPS) on a staggering $81.3 billion in revenue. The stock fell 7.6% after missing Q1 profit estimates and lowering Q2 operating income guidance in April, but bottomed out quickly and rallied 30% into Wednesday’s close at 3,033.

Amazon.Com CEO Grilled By Congress

CEO Jeff Bezos and other big tech executives appeared before Congress on Wednesday and got grilled about allegedly monopolistic practices. Bezos denied the charges, insisting the company was competing against a host of large players. He also noted that Amazon accounts for less than 1% of the $25 trillion global retail market and less than 4% of retail in the United States. Finally, he claimed the company has done a good deed by inviting 3^rd party retailers to participate, advising “we could have kept this valuable real estate to ourselves”.

BMO Markets analyst Daniel Salmon raised his Amazon.Com price target from $2850 to $3500 ahead of the release, noting “we believe AMZN’s long-term opportunity is stronger than ever and we continue to see outperformance over the next 12 months. But per CEO Bezos, you may want to take a seat, because [they] are not thinking small and we are cautious into the print, owing to recent stock outperformance and the potential for significant new investment spending.”

Wall Street And Technical Outlook

Wall Street rates the stock as a ‘Strong Buy’, based upon an astounding 36 ‘Buy’ and just 2 ‘Hold’ recommendations. No analysts are recommending that shareholders sell their positions and move to the sidelines at this time. Price targets currently range from a low of $2,162 to a street-high $3,800 while the stock is trading close to $200 below the median $3,200 target. This positioning favors higher prices after a strong report and bullish guidance.

Technically speaking, Amazon.Com is showing signs of fatigue after an historic uptrend underpinned by COVID-19 tailwinds. The stock has gained more than 50% since breaking out above 2018 resistance at 2,000 in March, setting off extremely overbought relative strength readings that now favor a consolidation of gains, rather than quick assault on 3,500. This pullback may have already begun, with steady profit-taking since the July 13 high at 3,344.