AmazonShares closed down 7.56% on Friday at $3,327.59. The company released its financial report yesterday, showing miss the market expectation second-quarter revenue and third-quarter guidance, prompting several investment banks to lower their target prices and a record fine of €746 million (approximately US$888 million) from the European Union for violating data privacy regulations.
Financial reports show that Amazon's revenue in the second quarter was $113.08 billion, a year-on-year increase of 27.2%, marking the third consecutive quarter that it exceeded $100 billion, but miss the market expectation' revenue was $115.2 billion. Looking ahead to the third quarter, Amazon expects revenue to be between $106 billion and $112 billion, representing a year-over-year increase of 10%-16%, while miss the market expectation expects revenue to be between $119.2 billion.
Following the release of earnings reports, several major Wall Street firms released research reports, lowering their target prices for Amazon. Many analysts expect the company's short-term growth to slow down, but remain optimistic about its long-term growth prospects.
UBSAnalyst Michael Lasser lowered his price target for Amazon from $4,350 to $4,020, but maintained his "buy" rating.
In a research note, the analyst told investors that Amazon's second-quarter revenue fell short of expectations as consumers returned to stores, engaged in more leisure activities, and reduced online spending. However, Lasser added that Amazon still accounted for 44% of total new online spending this quarter, far higher than the typical 36% over the past five years.
Oppenheimer analyst Jason Helfstein lowered his price target for Amazon from $4,400 to $4,200 and maintained his "Outperform" rating. Helfstein told investors in a research note that he expects Amazon's growth to slow in the second half of the year, but he remains optimistic about the company's long-term growth prospects.
Credit SuisseAnalyst Stephen Ju lowered his price target for Amazon from $4,850 to $4,700 and maintained his "Outperform" rating.
While most investors are focused on third-quarter revenue guidance that fell short of market expectations, Ju believes that more importantly, capital expenditures will continue to rise as Amazon continues to build its "last mile" delivery system in preparation for expanding its Prime membership one-day delivery service. However, Ju said he might buy during a stock price correction.
Morgan StanleyAnalyst Brian Nowak lowered his price target for Amazon from $4,500 to $4,300, but maintained his "overweight" rating.
In addition, media reports indicate that Amazon was fined a record €746 million by the EU for violating the EU's General Data Protection Regulation (GDPR).
Amazon subsequently responded that the fine was baseless. "There was no data breach, and no user data was exposed to any third party."
This is reportedly the largest fine to date since the EU GDPR rules came into effect in May 2018.
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