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Amazon stocks rally with better-than-expected performance in the second quarter

Amazon second-quarter results beat expectations with its performance. The results, announced on Thursday, led to a 13% rise in stock market prices.

The company reported an Earnings per share (EPS) of -20 cents. The revenue is $121.23, better than expectations of $119.09.

Other Amazon segments also performed well. Amazon Web Services reported revenue of $19.7 billion against expectations of $19.56. In addition, the company’s advertising services brought in $8.76 billion against expectations of $8.65.

Amazon thus had revenue growth of 7% in the second quarter. This is in contrast to poor performances by other Big Tech companies. Apple and Amazon are the only companies to have resisted this trend.

These good figures come against the backdrop of higher costs and rising inflation. The company stated that it is working to resolve controllable costs. Inflation has driven fuel, energy, and transportation costs up. They achieved this performance through productivity improvements.

Amazon is also curtailing its workforce and shedding unnecessary costs. During the pandemic, companies rapidly expanded, riding the booming e-com wave. However, the e-com space has lost steam after the pandemic. Hence companies are dwindling down their operations to cut back on costs.

Amazon laid off 99,000 employees till the end of the second quarter. It has also slowed down recruiting. Amazon will continue to hire for AWS and its advertising unit, though.

Amazon reported a 4% decline in its online stores segment. It reflects post-covid stagnancy in the e-com space. However, its advertising business is growing fast. Ad revenue has grown by 18% in the second quarter.

This is again in contrast to advertising revenue in other companies. For example, Facebook reported a first-ever loss in Ad revenue. Similarly, YouTube’s ad revenue growth dropped to 4.8% from 84% a year ago.

Amazon’s CEO Andy Jassy’s perception will swing positive. The second-quarter results show that he efficiently handled the company in his first year. He now faces the task of accelerating growth in Amazon’s core retail business. Investors’ interest in the company depends on whether they can achieve that.

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