Amazon post-earnings performance: volatility and trends analysis

(AI summary)

Prime moves: how Amazon's stock delivers post-earnings surprises

Amazon (AMZN) is a global e-commerce leader, driven by its Prime program and vast distribution network. The Whole Foods Market acquisition expanded its presence in physical grocery stores, while Amazon Web Services (AWS) dominates the cloud computing market. Known for its Alexa-powered Echo devices, Amazon uses AI to enhance sales.

The company reports revenue from North America, International, and AWS, targeting consumers, sellers, and developers. This article examines Amazon's historical share price movements from 2022 to 2024 following earnings announcements, offering valuable insights for investors and traders.

Key metrics

Q2 2024 performance

• Revenue: $148 billion
• Revenue growth: 11% year-over-year (YoY)
• Diluted earnings per share (EPS): $1.26
• EPS YoY growth: 101.49%

Comparison to Q1 2024

• Revenue: $143.3 billion
• Revenue growth: 12.48% YoY
• Diluted EPS: $0.98
• EPS YoY growth: 216.13%

Post-earnings performance analysis

• Immediate reactions (one day)

Amazon’s share price tends to experience substantial movement within one day of its earnings announcements. The most notable one-day surge occurred in the second quarter (Q2) of 2022, where the stock gained close to 15%. On the flip side, in the third quarter (Q3) of 2022, the stock experienced a sharp decline of roughly 15%. These rapid movements suggest that Amazon’s quarterly earnings results significantly impact investor sentiment and market expectations in the short term, resulting in pronounced price volatility.

• Short-term adjustments (one week)

In the one-week window, Amazon’s stock generally continues to show volatility, though with a mix of upward and downward adjustments. The largest gain, of nearly 20%, occurred during the week following Q2 2022 earnings, while the most notable drop, around 20%, occurred after the Q3 2022 earnings report. These movements suggest that investors often take additional time to digest earnings details, which can prompt further short-term volatility as the market adjusts its outlook for the company’s future performance.

• Medium-term trends (one month)

Over a one-month period, Amazon’s share price demonstrates more sustained trends compared to the immediate and short-term periods. The most dramatic movements occurred in Q2 and Q3 of 2022, where the stock either appreciated or depreciated by approximately 20-25%. This indicates that while initial market reactions can be sharp, the one-month period often reveals the market’s more settled view of Amazon’s long-term earnings potential and performance outlook.

• Overall patterns

The broader trend from 2022 to 2024 highlights considerable price volatility after earnings, especially in 2022, with large swings both upwards and downwards. However, in 2023 and into early 2024, there appears to be less dramatic price action following earnings, suggesting a possible stabilisation in market conditions or investor expectations. Generally, the most significant price movements occur either immediately or within the first week following an earnings report, while month-long trends tend to be more moderate.

• Implications for investors

Amazon’s share price movements around earnings reports suggest short-term volatility, particularly within the first day and week. This presents opportunities for traders looking to capitalise on rapid price shifts. However, long-term investors should focus on the more stabilised one-month trend, which tends to reflect the market’s consensus on Amazon’s overall performance.

Careful analysis of earnings reports and key financial metrics like revenue growth and margins will help investors make informed decisions, especially when considering external market conditions that may also influence the stock's movements.

Amazon's post-earnings performance chart