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No be small wahala for Amazon o! Dem just release their second-quarter results, and like magic trick, stock come drop almost 10% in just two days. E don recover small, but make we no lie, e dey still dey waka shakily for this year. Na the S&P 500 and Nasdaq composite dey collect the shine instead. How we go take make sense of this one?
First of all, Amazon report correct results wey show say dem dey grow operating income faster than their revenue. But no be all that glitters dey shine, sha! Their third-quarter guidance dey raise eyebrow, especially for the Amazon Web Services (AWS) side. Dat one na the real deal wey don dey face some serious competition from Microsoft Azure and Google Cloud. Dem no dey smile for AWS side these days, as e be like say we dey see slow growth ahead.
Abeg, where dem cash come dey? Free cash flow don slump to $18.2 billion for trailing 12 months go June 30, compared to $53 billion wey dem get last year same time. Amazon dey use wetin dem get wella to invest in things like AWS data centers, generative AI tools and dem Prime delivery skills wey people sabi enjoy. But na dem guidance na wetin dey make investor dey wonder if dem fit keep this level.
As e dey stand now, Amazon dey forecast small small revenue growth of 10% to 13%, while the operating income fit drop or rise by 11% to 18%. E be like say investors dey make big mistake when dem dey rush buy Amazon stock without understanding say na long-term vision dem dey play. Na dem plenty risks wey dem take over time wey don make a lot of sense for patient peeps, but right now the earnings, e no dey consistent, and cash flow dey shaky. No be so we go wan see am.
Amazon dey face some big competition for that tech space, as the likes of Apple, Microsoft, and Alphabet dey handle demself better with stock buybacks wey help dem maintain share price while keep talent with stock-based compensation. Amazon no dey do stock buyback for years, and dem still no dey pay dividend. Instead, dem dey use over $20 billion for stock-based compensation wey dey dilute existing shareholders. E no sweet for dem wey don invest their money there.
AWS fit still be the king for global cloud market, but as dem dey try to expand their capacity and keep up with AI, investors dey wan see returns for this their serious hustle. Dem don dey look for ways to manage long-term growth without small-small losses in stock price. As Amazon stock dey stagnate for market, the valuation don become better, but if investment no see result, e fit still drop down again.
Investors wey wan try for Amazon stock go need strong hearts because e dey challenge well well now. But if you fit hold on and believe in the e-commerce and advertising success wey Amazon don build over the years, you fit still find value here. Just know say the investment wey dey come fit be riskier than some of dem other big players for the space.
Before you join Amazon crowd, no forget say dey recommend other options wey fit give better balance in capital allocation. Na dem traditional stocks and solid investments wey experts dey suggest now. Amazon fit be option for some who believe in their long-term hustle, but e looks like other stocks dey collect the limelight. Time go tell how e go be!
