Amazon has been one of the best stocks you could buy over the last five years. Since August 2016, its share price has more than quadrupled. And since the pandemic began in the first few months of 2020, it’s doubled, as people shunned physical retail locations in favor of online purchasing due to fears of the spreading virus.
But now that the pandemic seems to be receding in some parts of the world, consumers are feeling more comfortable going to shop in brick-and-mortar stores again. As a result, they’re buying less online, which is hurting Amazon’s bottom line.
Amazon announced yesterday that its Q2 2021 saw online sales slowing. As Barron’s reports, online sales were still up 16% from a year ago to $53.2 billion, but that’s over $4 billion less than Wall Street was expecting. That 16% growth is also far from the 41% growth seen in Q1 2021. Despite slowing online sales, Amazon said it expects Q3 2021 growth to hover between a 10% and 16% increase from current levels.
At the time of this writing, Amazon shares are down 6.25% to $3,375 per share. Yesterday, they opened at $3,627.75 before earnings were announced. The good news for Amazon? Its cloud computing offerings, Amazon Web Services, fared much better. AWS brought in $14.8 billion in revenue during the quarter—a 37% increase.
So, where does Amazon go from here? We shouldn’t worry too much about the company. It’s still one of the most valuable in the history of the world and one that millions of customers shop at on a daily basis.
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