Amazon's big spring sale, taking place from 20 to 25 March, signals the company's willingness to adapt to the needs of the market. Analysts expect it may boost first-quarter sales volume. With a market capitalization of roughly $1.8 trillion, Amazon has already erased all the losses it suffered during 2022, due to the unfavorable economic situation.[1] Let's take a closer look at this company's strategy to satisfy both consumers and investors.[2]
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Amazon sale in an unusual time of the year
About the company
First and foremost, Amazon is the largest online retailer in the world. In its own words, the company focuses primarily on its customers instead of its competitors.[3] It is renowned for its ability to deliver goods quickly and flexibly, its bargain prices, and its wide range of products or services. It offers an Amazon Prime subscription, which is not only one of the most popular streaming platforms, but also provides benefits such as free and fast shipping and various other exclusive offers. Amazon provides a variety of digital content and services, including Kindle eBook readers, the Amazon Music service, Amazon Studios (producing original content), the Alexa voice assistant, and much more. Over the years, Amazon has expanded in the retail sphere through acquisitions (such as Whole Foods Market) and investments in various sectors.
Big Spring Sale
The Big Spring Sale is special at Amazon not only because it's the first such event to be held in the spring, but it will apply to all customers, not just Prime subscribers, although subscribers will have access to special exclusive promotions on every day of the sale. Customers will have the opportunity to shop for discounted clothing, housewares or furniture or cosmetics.[4] Amazon usually organises its 'discount days' in the run-up to Christmas or during the summer months, with the reason for this unusual spring timing being the continued high inflation and consumer price rises over the previous month, meaning that customers will welcome discounted products during this period. Another reason is the growing competition from Chinese retailers such as Temu and Shein, to which more and more consumers are turning for low prices.[5] According to analysts at Bank of America (BofA), the event could have a positive impact on first-quarter earnings but may also slightly reduce profit margins due to reduced merchandise prices.[6]
Economic results
Amazon posted robust financial results for the fourth-quarter ending December 31, 2023, with revenues growing to $170 billion, up 14 % from $149.2 billion USD for the same period in 2022. Operating income saw a significant jump to $13.2 billion versus $2.7 billion in the fourth-quarter of 2022.
The remarkable performance translated into a significant increase in net income, which reached $10.6 billion in the fourth-quarter of 2023, compared to just $300 million in the same period last year. Earnings per share rose to $1.00, an equally significant jump from $0.03 in the fourth-quarter of 2022.* The company's revenue grew by 12 % to $574.8 billion in 2023 compared to $514 billion in 2022. Net income in 2023 rose to $30.4 billion with earnings per share reaching $2.90 compared to 2022 when they posted a net loss of $2.7 billion and a price per share of $0.27. This impressive financial performance underscores Amazon's continued growth trajectory and financial strength.[7]
First-quarter Outlook
Amazon released guidance for the first-quarter of 2024, expecting revenue in the range of $138 billion to $143.5 billion, reflecting expected growth of 8-13 % compared to the same period in 2023. [1] Operating income is expected to be between $8 billion and $12 billion, in contrast to the $4.8 billion reported in the first quarter of 2023. [2] The guidance, however, does not foresee acquisitions or any form of restructuring or legal settlements.[8]
Amazon.com's stock price evolution over the last 5 years. (Source: Google Finance)*
New collaboration with NVIDIA
Amazon Web Services (AWS), a subsidiary of Amazon.com that provides cloud-computing services, will offer NVIDIA's Blackwell GPU platform to its customers, enabling them to leverage advanced infrastructure and software for generative artificial intelligence. Together, they will provide their latest and greatest technologies, including multi-node systems and AI software, to enable customers to perform real-time inference at massive scale and at a lower energy cost than previous generations. AWS and NVIDIA are working together to strengthen the development of generative AI and improve its use in the healthcare or biomedical fields.[9] [10]
Conclusion
Amazon's willingness to organize various sales even during off-peak seasons signals that it is constantly trying to adapt to its customers and their financial situation. At the same time, however, Amazon is also looking after its own interests, as it is aware of the growing competition in the form of low-cost Chinese online retailers. This company, like others, has experienced strong growth problems in the previous 2 years, but it has more than compensated for this and is currently managing to maintain its leading position in the market.
Adam Austera, Principal Analyst at Ozios
[*] Past performance is no guarantee of future results
[1,2] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which may change. Such statements are not guarantees of future performance. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.
[1] https://companiesmarketcap.com/amazon/marketcap/
[3] https://www.investing.com/news/assorted/amazon--nvidia-extend-ai-collaboration-432SI-3342894
[4] https://nvidianews.nvidia.com/news/nvidia-blackwell-platform-arrives-to-power-a-new-era-of-computing
[5] https://www.aboutamazon.eu/who-we-are
[6] https://www.nbcnews.com/select/shopping/amazon-spring-sale-2024-rcna143414
[7] https://www.cnbc.com/2024/03/14/amazon-plans-spring-sale-for-march-20-to-25-not-limited-to-prime.html
[8] https://www.investing.com/news/stock-market-news/amazon-to-host-big-spring-sale-next-week--heres-what-to-expect-432SI-3340454
[9] https://ir.aboutamazon.com/news-release/news-release-details/2024/Amazon.com-Announces-Fourth-Quarter-Results/
[10] https://ir.aboutamazon.com/news-release/news-release-details/2024/Amazon.com-Announces-Fourth-Quarter-Results/
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