Saturday 25 January 2020

Amazon bucks US tech sell-off as shares hit all-time high

Amazon’s fulfillment centre.
Amazon’s fulfillment centre.

Reuters

Shares of Amazon.com rose 4pc to an all-time high after the online retailing giant's quarterly profit topped $2bn for the first time, powered by its best operating margin in 13 years.

In contrast, social media platform Twitter on Friday reported fewer monthly active users than expected and warned that figure could keep falling as it deletes phony accounts, sending shares tumbling.

The company said the clean-up work it was doing of purging automated and spam accounts had some impact on user metrics in the second quarter, and that it was deciding to prioritise improving suspicious accounts and reducing hate speech and other abusive content over projects that could attract more users.

Twitter, like its bigger rival Facebook, has been under pressure from regulators in several countries to weed out abusive content, better protect user data and boost transparency on political ad spending.

The user outlook came as Twitter reported higher-than-expected revenue thanks to the FIFA World Cup, video ads and booming international ad revenue. Twitter also earns revenue from licensing its data.

Meanwhile, Wall Street analysts cheered the broad-based strength in the Amazon results and overlooked the retailer's decision to tap the brakes on its blazing revenue growth for plump profits.

Several brokerages raised the price target on the stock saying that the high levels of profitability may be a new normal for the company.

Brokerage Oppenheimer made the most aggressive move, raising its price target on the stock by $380 to $2,130, going past the median target of $2,100.

"What we've been waiting on for many years is finally happening, meaningful margin expansion," Macquarie Research analysts said in a note.

Amazon's results were also a relief for distressed investors in the U.S. technology sector, still woozy from a nosedive in Facebook Inc's (FB.O) shares following a profit warning earlier in the week.

"In this messy earnings season, AMZN stands out as one of the strongest performers," SunTrust analysts said. (Reuters)

Irish Independent

Also in Business