Amazon (AMZN) Pre-earnings Analysis
Chart done on hourly timeframe. Amazon shares are trading around their all time highs ahead of the company’s very anticipated earnings report. After a groundbreaking performance in 2023, investors are excited to hear about Amazon’s first quarter performance and what it expects to post for the rest of the year. Revenue in 2023 reached 575B, up 11% from the prior year and their best year yet. Net income, which has always been a struggle for the online retailer, grew to 30B, significantly above the -$2.72B in 2022. Amazon’s profitability can be attributed to their AWS Cloud Computing Services, which has been a massive source of their recent growth and will be a big highlight this earnings season.
Amazon’s stock clearly reflects their financial performance, but pressures of a dividend are mounting after Meta and Google both announced dividends. With free cash flow around 32B, there’s a small chance they’ll introduce a dividend, however we see that as unlikely. Amazon is recovering from their very poor performance in 2022 and is still building up profitability and cash reserves, which may require more time before they can comfortably give investors are a dividend. Right now there are higher chances that their stock will push higher without the need of a dividend, especially if they can redo last year’s performance.
Option chain analysis:
Amazon’s options expiring on May 3rd, 2024 currently reflect an implied volatility reading of 92%, which translates to about a $14 move from the underlying stock. The direction of that move will depend on the earnings results and call.