After the closing bell on Thursday, the online e-commerce behemoth Amazon (
AMZN Quick Quote AMZN - Free Report) came up with mixed results for the first quarter. Shares slumped 7.6% in the key trading session on May 1 on weak outlook.
Earnings of $5.01 per share missed the Zacks Consensus Estimate by 21.2%. The bottom line also declined 29.3% from the year-ago quarter. Net sales of $75.45 billion comfortably surpassed the Zacks Consensus Estimate of $74.36 billion and exceeded management’s guided range of $69 billion to $73 billion. Further, the figure improved 26.4% on a year-over-year basis.
The coronavirus pandemic and the resultant lockdown played foul in the quarter as it put a stop on the sale of non-essential items and luxury commodities during the reported quarter. Further, there were increased expenses in the quarter.
Notably, Amazon spent more than $600 million in order to combat coronavirus-induced disruptions in the first quarter. Amazon also plans to shell out $4 billion in order to protect its workforce, delivery vans and customers from COVID-19 infection.
These headwinds overshadowed strong grocery sales amid stay-at-home orders to some extent. The company expanded delivery capacity by 60%. Further, it expanded its grocery pick-up services from 80 Whole Foods stores to 150 of them (read:
E-Commerce ETFs Boosted by the Stay-At-Home Economy).
Among the other bright points, Amazon Web Services (AWS) revenues (14% of sales) also surged 32.8% year over year to $10.2 billion. In a nutshell, the top line was primarily driven by solid customer demand, strong AWS momentum, expanding smart devices portfolio and strengthening content portfolio on Prime Video.
Market & ETF Impact
After declining 7.6% on May 1, shares slumped 1.6% in the pre-market session on May 2.Amazon has been one of the key contributors of the recent market rally. Its shares gained 19.9% in the past month (as of May 1, 2020) against 13.7% advancement in the S&P 500.
So, any underperformance from this e-commerce giant can’t be taken lightly by its investors. Some downward earnings estimate revision by analysts are likely in the near term, but its increasing focus on cloud and streaming business should bode well for the long term.
Given this, investors with a strong stomach for risks could tap the recent dip in Amazon in the form of ETFs with the highest allocation to this Internet giant. These ETFs mainly belong to the consumer sector, which may benefit after the reopening of economies. A basket approach will also minimize Amazon’s latest weakness. Below we have highlighted a few of those ETFs (see
all Consumer Discretionary ETFshere): Fidelity MSCI Consumer Discretionary Index ETF ( It has a Zacks ETF Rank #3 with a Medium risk outlook. Amazon makes up for 33.5% in the fund’s basket. FDIS Quick Quote FDIS - Free Report) : Vanguard Consumer Discretionary ETF ( This ETF has a Zacks ETF Rank #2 with a Medium risk outlook. Amazon has 28.4% allocation. VCR Quick Quote VCR - Free Report) : ProShares Online Retail ETF ( Amazon makes up for 27% in the fund’s basket. ONLN Quick Quote ONLN - Free Report) : Consumer Discretionary Select Sector SPDR Fund ( The fund carries a Zacks ETF Rank #2 with a Medium risk outlook. Amazon accounts for 24% share. XLY Quick Quote XLY - Free Report) : VanEck Vectors Retail ETF ( The fund has a Zacks ETF Rank #3 with a Medium risk outlook. Amazon makes up for 22.7% of the assets. RTH Quick Quote RTH - Free Report) : iShares Evolved U.S. Discretionary Spending ETF ( Amazon makes up for 15.2% in the fund’s basket. IEDI Quick Quote IEDI - Free Report) : iShares U.S. Consumer Services ETF It carries a Zacks ETF Rank #3 with a Medium risk outlook. Here, AMZN takes 10.3% share. IYC): iShares Global Consumer Discretionary ETF ( AMZN accounts for 10.2% share in the basket. RXI Quick Quote RXI - Free Report) : Want key ETF info delivered straight to your inbox?
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