Amazon, Shopify, PayPal Earnings Suggest Continued Growth in eCommerce

Image: Bigstock Online retailers have not been popular investments since the worst of the pandemic, as physical retail has come back strongly with more people moving outdoors. Inflation is a top concern right now, and retail in general is not looking so good as a result.

But despite these negatives, earnings reports from one established and another relatively new online retailer show that not all companies are the same. While pandemic-style strength in demand is absent, the companies continue to grow, supporting the theory that some of the shift online has been permanent. Inc. ( AMZN – Free Report ) reported an earnings miss of 33.3% in the last quarter that came from sales that beat the Zacks Consensus Estimate by 1.3%.

The Zacks Rank #3 (Hold-rated) stock’s revenue growth remains extremely strong, with the growth rate up 40% above the rate during the pandemic-influenced May 2020-May 2021 and the compound annual growth rate (CAGR) since the pandemic +25%.

In the last quarter, product revenue missed analyst estimates by 3.2% while services revenue beat by 4.0%.

By segment, both North America and AWS beat analyst estimates by a respective 6.0% and 1.6%. International was the disappointment, missing by 8.8%.

Physical stores beat by 4.7% while online sales fell 2.8% short. Other metrics were also a mixed bag: Third party seller services revenue was ahead of estimates (by 6.4%) as was advertising services revenue (by 1.4%) and other (by 90.8%, off a smaller base). But subscription services revenue missed by 1.2%.

Segment-wise operating income shows that North America and International losses came in 67.7% and 7.4% lower than expected. However, AWS profit was also 4.2% below estimates. The lower-than expected losses came from improvement in the fulfilment network that offset some of the cost pressures at worldwide stores, inflationary pressures (particularly in energy electricity rates) […]

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