Friday's Headlines: Amazon Sinks Premarket As Earnings Claim Another Victim

Friday's Headlines: Amazon Sinks Premarket As Earnings Claim Another Victim

There will be no Market Headlines on Monday the 31st of October due to a Bank Holiday in Ireland. The Headlines will return on Tuesday the 1st of November.

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

Shopify (SHOP) +17.3%

ServiceNow (NOW) +13.4%

Arista Networks (ANET) +9.3%

2U (TWOU) +7.1%

Teladoc (TDOC) +6.5%

Moving Down ⬇️

Meta (META) -24.6%

Align Technology (ALGN) -18.1%

Baozun (BZUN) -8.4%

Silicon Valley Bank (SIVB) -5.1%

Boston Beer Co. (SAM) -4.3%

Here are the stories that you need to know ahead of market-open today, Friday the 28th of October.

Amazon Sinks Premarket As Earnings Claim Another Victim 😰

Shares of the world’s largest online retailer have slumped by over 13% premarket this morning following Amazon’s (AMZN) third-quarter earnings release yesterday evening. Revenue figures underwhelmed across the board, while the firm’s outlook for the fourth quarter and beyond left investors far from impressed.

Amazon reported earnings per share of $0.28 on revenue of $127.1 billion — a shade below the 127.5 billion expected by analysts. Despite this marking revenue growth of 15% on the previous quarter, Wall Street simply expected more. CEO Andy Jassy was quick to point out some of the progress being made by the firm:

“We’re also encouraged by the steady progress we’re making on lowering costs in our stores fulfillment network, and have a set of initiatives that we’re methodically working through that we believe will yield a stronger cost structure for the business moving forward.”

Jassy went on to mention the current macroeconomic environment and its impact on Amazon’s efforts, but stated that it won’t change the company’s “maniacal focus on the customer experience” as it continues to chase further growth.

This marks the second double-digit sell-off seen by Amazon following an earnings report this year, with April’s call prompting a similar 14% slump as investors reacted to weak guidance. Prior to market open today, Amazon is down close to 35% for the year as many Big Tech firms struggle to deal with the current market environment.

Shopify Pops on Earnings Beat 🛍

While all of Big Tech appears to be floundering this week, there was no such falloff for e-commerce juggernaut Shopify (SHOP). The Canada-based company saw its stock soar by over 17% yesterday following an impressive showing in its third-quarter earnings call.

Shopify posted a loss per share of $0.02 on revenue of $1.37 billion, outpacing analyst estimates of a $0.07 loss on revenue of $1.33 billion respectively. Despite having to deal with a harsh macro environment and the impact of a strengthened dollar, Shopify still managed to grow revenue by 22% from the year-ago quarter.

Shopify grew at an astronomical rate during the COVID-19 pandemic, and has had to deal with the resultant deceleration of e-commerce since the world began to reopen. However, as the company’s president Harley Finkelstein put it,

“I think what’s being missed is Shopify is a great reopening story. If you look at Shopify point-of-sale, physical retail of GMV, it was up 35% year on year.”

Shopify has managed to significantly grow this point-of-sale network to offset the reduction in online sales, giving it a strong foothold in every aspect of the future of commerce.

However, a lot more will be required to reverse the company’s slide this year. Shopify is down close to 75% for the year and almost 80% off all-time highs witnessed during the pandemic. However, if it can continue to outperform, it may have a chance to recapture some of its past glory.

Align Misses the Mark 🦷

Align Technology (ALGN) fell more than 18% on Thursday after it missed quarterly revenue and profit expectations yet again. That makes three straight quarters of disappointment for Align investors.

In the third quarter, Align generated $890 million, down 12% year-over-year and missing analysts’ estimates by more than $60 million. $25 million of this miss can be attributed to unfavorable currency exchange rates but alignment shipments were also down 12.5% year-over-year.

The company recorded net income of $72.7 million, down nearly 60% from the $181 million it recorded in the same quarter last year.

We first sensed trouble was brewing earlier this year when CEO Jospeh Hogan cited a slowdown in consumer spending. Patients have become more hesitant to splash out on Invisalign treatments while doctors have cut down on tech upgrades, impacting Align’s oral scanner sales.

Trouble will likely continue for Align so long as macroeconomic conditions remain challenging. However, its long-term outlook still looks promising as management feels confident the company can gobble up more market share.

Align’s stock is down more than 75% this year.

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