AmazonShares closed down 7.56% at $3,327.59 on Friday. The company's financial report released yesterday showed that the second quarter revenue and third quarter performance guidance were both miss the market expectation, and many investment banks lowered their target prices. It was also fined a record 746 million euros (about 888 million US dollars) by the European Union for violating data privacy regulations.
According to the financial report, Amazon's revenue in the second quarter was USD 113.08 billion, a year-on-year increase of 27.2%, which was the third consecutive quarter of more than USD 100 billion, but miss the market expectation' revenue was USD 115.2 billion. Looking forward to the third quarter, Amazon's revenue is expected to be between 106 billion and 112 billion US dollars, a year-on-year increase of 10%-16%, and miss the market expectation' 119.2 billion US dollars.
After the release of the earnings report, a number of major Wall Street banks issued research reports and lowered Amazon's target prices. Many analysts expected the company's short-term growth to slow down, but they were still optimistic about its long-term growth prospects.
UBSAnalyst Michael Lasser lowered his price target on Amazon to $4,020 from $4,350 but maintained a "buy" rating.
The analyst told investors in a research note that Amazon's second-quarter revenue missed estimates as consumers returned to stores and engaged in more leisure activities, reducing online spending. But Lasser added that Amazon still accounted for 44% of total new online spending in the quarter, much higher than the usual 36% over the past 5 years.
Oppenheimer analyst Jason Helfstein lowered his price target on Amazon to $4,200 from $4,400 and maintained an "outperform" rating. Helfstein told investors in a research note that he expects Amazon's growth to slow in the second half of the year, however, he remains bullish on the company's long-term growth prospects.
Credit SuisseAnalyst Stephen Ju lowered his price target on Amazon to $4,700 from $4,850 and maintained an "outperform" rating.
While most investors are focusing on lower-than-market revenue guidance for the third quarter, Ju believes that more importantly, capital expenditure will continue to rise as Amazon continues to build a "last-mile" delivery system in preparation for the expansion of one-day delivery services for Prime members. However, Ju said he might buy in the event of a stock price pullback.
Morgan StanleyAnalyst Brian Nowak lowered his price target on Amazon to $4,300 from $4,500, still maintaining an "overweight" rating.
In addition, media reports have reported that Amazon has also been fined a record 746 million euros by the European Union for violating the European Union's General Data Protection Regulation (GDPR).
Amazon then responded that the fine was unfounded. "There was no data breach and no user data was exposed to any third party."
It is reported that this is the largest fine so far since the EU GDPR rules came into effect in May 2018.
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