Amazon (AMZN) Stock Drops 3% Before Q3 Earnings: Here’s Why

Jaxon Gaines
Amazon logo on wall
Source: CNBC

Amazon (AMZN) was one of several top stocks that took a tumble on Thursday, following a lack of investor confidence in Microsoft (MSFT) and Meta. Meta (META) and Microsoft (MSFT) stocks tumbled early Thursday, also pulling down the S&P 500; AMZN; and others. The company is set to release its Q3 earnings after the markets close today, where it hopes to recover back to record highs.

Amazon stock has gained 23% so far this year, slightly ahead of a 20% gain for the S&P 500. Shares reached a record high above 200 in early July before slumping through much of the summer. Today, Amazon stock shed more than 3% to 185.46. However, the company’s upcoming Q3 report is expected to bring big gains and momentum for investors.

Analysts Project Positive Q3 Earnings Report For Amazon: Will Stock Follow Suit With Gains?

Analysts polled by FactSet project Amazon will post a 21% increase in earnings for the September-ended quarter, to $1.14 per share. Sales are projected to rise 10% to $157.3 billion. In addition, Investors expect revenue growth for the closely watched Amazon Web Services division to further accelerate. Analysts project a 19.1% increase in AWS sales, to $27.5 billion. Sales grew 18% in the second quarter.

Furthermore, ad sales are also expected to rise in the upcoming earnings report. Amazon’s advertising division is projected to grow its sales by 18.3% to $14.3 billion. However, that’s down slightly from 19% growth in the second quarter.

Also Read: Amazon (AMZN) Q3 Earnings: Buy, Sell, or Hold? AWS & Ads Impact

Overall, there is bullish optimism on AMZN stock once the Q3 report is published. However, there is still some concern about how the company will perform in Q4. BofA Securities analyst Justin Post wrote last week that there is a risk that “Street estimates are too high relative to 4Q guidance history.” Amazon is known for giving conservative guidance, therefore, there is more room to grow or fall following the report.