Amazon's Q2 financial report is out! Losses continued in the first quarter, but there is a turnaround

On the 28th, local time in the United States, Amazon released its second quarter financial report for 2022. In Q2, Amazon continued its losses in the first quarter and had a deficit of more than 2 billion US dollars!

According to the official financial report, Amazon's total revenue in the second quarter was $121.23 billion, slightly higher than the market expectation of $119.09 billion. In the second quarter, Amazon's overall loss was about $2 billion.

Although both companies reported losses in their financial reports, the market reaction to the Q2 financial report was completely different from that of the Q1 financial report. After the financial report was released, Amazon's stock price rose by about 13% in extended trading . Let's take a look at what trend Amazon's financial report revealed that led to a rise in its stock price despite losses.

First, let's review the Q1 financial report. Amazon's revenue in the first quarter of this year was a huge loss, and it was also lower than the market's expectations for Amazon's revenue. When Amazon announced its Q1 financial report, it shocked the entire US market. Not only did Amazon's own stock price plummet, but it also led to a drop in the stock prices of other technology companies and retail companies. (Add my WeChat ID zyqmda to get the high-profit product selection tips) However, Amazon's financial report also took the lead in revealing some phenomena. There were few profitable companies in the United States in the entire Q1 quarter, and the few technology and retail companies that announced their financial reports after Amazon were almost all loss-making.

The Q2 financial report that has been released now also showed a loss of more than 2 billion US dollars, but the place where the loss occurred was different from that in Q1, which was also the key point that caused Amazon's stock price to rise instead of fall.

Most of the losses in Q1 were due to excessive investment in the FBA logistics network, which led to the mall business running out of money, and the profits from cloud computing could not fill the gap. In the Q2 financial report, the share price of its subsidiary Rivian plummeted by 49%, and the market value evaporated by US$3.9 billion. After deducting this part of the loss, Amazon's total loss in Q2 was 2.028 billion, indicating that the revenue of other businesses is still positive.

The financial report shows that both advertising and cloud computing businesses are profitable. AWS sales increased 33% year-on-year to $19.74 billion, higher than Wall Street's forecast of $19.56 billion. The advertising business is the highlight of the entire financial report. While the revenue of competitors such as Facebook and Google has fallen or slowed down, Amazon's advertising business revenue has soared. In the second quarter, advertising revenue increased by 18% to $8.76 billion. It has become a giant among Internet advertisers. The advertising business has become Amazon's second cash cow besides AWS (cough cough, our sellers have contributed a lot). The growth of these core businesses is the main driving force behind Amazon's stock price rise against the trend.

Another point that concerns us sellers is that the online store, which is Amazon's core retail business, is actually shrinking slowly. Compared with Q2 last year, Amazon's online store business revenue fell by 4%, which is the only shrinking part of its main business except for investment.

Please note that the main source of income for this segment is the sales of self-operated products. As we can see from the table above, the revenue from third-party seller services is still growing. Since the bulk of this revenue is sales commissions, it can be said that the sales of third-party sellers in Q2 are still OK, at least they have not shrunk and are still growing at a rate of about 9%. Only the market for self-operated products has shrunk, which is still a small benefit for us sellers. Because of the risk of antitrust splitting in the future, Amazon will definitely reduce its reliance on self-operated business revenue and put the revenue center on advertising and AWS.

In general, this financial report is much better than Q1, not including the July Member Day, which was a big hit this year. Amazon itself expects Q3 growth to be around 13%, and we sellers should also follow up Amazon's autumn Prime event in time in Q3.