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Q1 2022 Earnings Preview: Amazon & Mastercard

Written by Larince Zhang

Amazon

Amazon, an electronic commerce and cloud computing behemoth which ranks 5th in market capitalization (over $1.4T), is scheduled to report its Q1 2022 results post market close on Thursday, 28th April.

Fig. 1: Estimated Worldwide Amazon GMV. Source: Marketplace Pulse.

In 2021, it is estimated that the total gross merchandise volume (GMV) of Amazon more than doubled in three years to $600B.  Over 80% of the incremental sales came from the third-party marketplace, which also nearly doubled in two years to $390B. In fact, Amazon is the leader in online sales with people visiting its website numbering more than the entire population of Russia.

Fig. 2: Net Revenue of Amazon. Source: Statista.

In Q4 2021, Amazon generated about $137.41B in sales revenue, up 24% (q/q) and 9.4% (y/y) respectively. The overall trend remains cyclically upward due to the company’s ability to develop new products, acquisitions, and various different service offerings, thus ensuring a smooth user experience and therefore enlarging its customer base. In addition, Amazon Prime, introduced in 2005, is one of the company’s most successful programs; despite the membership price being increased after 25th March this year, some believe that “there is no service out there quite like Amazon Prime”, and “its true value should be worth around $1000 if you were  to fully price out each service.

Fig.3: Amazon’s Quarterly Reported Sales and Earnings per ShareSource: CNN Business.

Consensus estimates for reported sales in the coming announcement stand at $116.5B, down -15.21% from the previous quarter but up +7.37% from a year ago. Earnings per share (EPS) is estimated to hit $8.33, down -70% (q/q) and –47.24% (y/y), respectively. Underlying headwinds to the company include supply chain challenges, surging costs and rising interest rates. On the other hand, Amazon is set to perform its 4th stock split in early June this year. Historical data shows that the stock tends to climb in the first three months after a split before retracing slightly lower, however, the stock splits in general did not affect the stock’s performance over time.

Technical Overview:

The #Amazon price retraced lower following its failure to break the high seen in early January this year ($3427.71). The company’s share price remains pressured below the 100-week SMA, currently testing to break FR 38.2% at $2827, or the low estimates of analysts at $2800. If the weekly candlestick successfully closes below these two levels, bearish momentum may continue towards the next support at $2534, or FR 50.0%. Otherwise, the 100-week SMA at $3188 serves as the nearest resistance. A successful bullish breakout may extend its gains towards the resistance zone $3415 and the high point that formed in July last year, at $3772.83.

Mastercard

Mastercard, an American multinational financial services corporation, will announce its earnings results for Q1 2022 on Thursday, 28th April before market open.

Fig.4: Mastercard’s Quarterly Reported Sales and Earnings per ShareSource: CNN Business.

In general, the company performs on par with market expectation in terms of sales and earnings per share (EPS). However, for the upcoming announcement, consensus estimates for sales stand at $4.9B, below the previous two quarters at $5.2B (Q4 2021) and $5.0B (Q3 2021). EPS is expected to hit $2.18, down -7.23% from the previous quarter, but up 25.29% compared to the same quarter last year.

Price changes in the short term may be influenced by the earnings result and the management’s discussion of business condition. The company has suspended its operation in Russia since early March,  the impact of which may be reflected later on in Q2 2022. On a positive note, the recent move of Mastercard towards the filing of over a dozen metaverse and crypto-related trademarks shows the effort made by the company to extend its core business,  while ensuring a more diverse, safer customer experience.

Technical Overview:

The #Mastercard share price was rejected at $363.70 (FR 61.8% extended from February high ($399.90) to March low ($305.15)), forming a double top price pattern. It is currently testing the support zone $341.30. A close below the said support zone may indicate possibility for the company’s share price to extend its losses further, towards the next support at $324.00-$327.50, and $305.15. On the contrary, if #Mastercard remains supported above $341.30, the 100-day SMA at $353.50 will serve as the nearest resistance, followed by $363.70 and $379.60. RSI and Stochastics indicators remain pressured below 50.0, with the fast line of the latter approaching the oversold area.

About the author

Larince Zhang

长达八年的实盘操作与市场分析经验。涉足的金融产品包含外汇、大宗商品、股指、商品期货、指数期货以及股票。大学主修金融学,秉持着学以致用的心态务必把课堂上所学的知识与临场实践经验相结合。 经过多年交易经验的积累与总结,坚信“大道至简”四字箴言。价格的变动即是幕后人为交易买卖所驱使。坚信市场考验的不是技术,而是人心。唯有正确的交易认知、缜密的策略布局与严谨的资金管理,方才是成熟交易的真谛。

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