Amazon and Twitter recently released their third-quarter earnings but what did the results mean for those involved in equity trading or even international share trading? In this piece, we are going to break down the results from an investor standpoint.
The online retailing giant posted impressive results, showing an operating income of 8.6$ billion as of September 30th 2018 (trailing nine months) compared to 2$ billion in September 30th 2017. This could be mostly attributed to the increase in net services by over 50% from $40 billion in 2017 to $63 billion in 2018. Furthermore, net product sales increased 25% from $77 billion in 2017 to $97 billion in 2018.
This yields diluted earnings per share (EPS) of $14.10 as at September 30th 2018 compared to a diluted EPS of $2.39 in 2017. This seems promising for investors as the company’s net earnings are increasing.
Another factor that may be important is examining the company’s market segment mix to determine which markets are most profitable. Operating income in North America increased from $1.1 billion in September 2017 (trailing nine months) to $5 billion in 2018 whereas international operating loss improved from an operating loss of $2.1 billion in 2017 to a net loss of $1.5 billion in 2018. Amazon web services showed an impressive increase in operating income from $3 billion in 2017 to $5.1 billion in 2018.
Generally, Amazon’s third-quarter earnings reports indicated promising returns for the company. From the report, we can discern that the company should place an emphasis on its Amazon Web services to continue to push its revenue. The company has announced new customers who have taken up its Amazon web services. There are noteworthy international brands here such as Samsung Heavy Industries, Hubspot and even Yelp. The company also announced the provision of new services on Amazon web services to increase the usability of the services as well as the introduction of a new service that reduces particular Amazon web services’ prices significantly. With an increased uptake in Amazon web services as well as the current clout Amazon already has, we expect the giant to maintain a steady growth in its earnings.
This seems like a stock that you may want to include in your portfolio.
To analyse Twitter, we need to bear in mind how their revenue is generated. The company earns revenue mainly through data licensing and advertising. The company realised an increase of 28% in total revenue from $590 million in Quarter 3 (Q3) 2017 to $758 million in 2018 Q3. About 86% of the revenue generated in 2018 was from advertisements. This implies that the platform’s financial health is mainly predicated on its use as a marketing platform.
Another point of note is the platform’s dependability on the US market. Over 50 percent of the revenue came from the US alone with Japan contributing 17% of the total revenue. Despite this, Japan continues to grow the fastest with an increase of 44% in revenue from the previous year, with the international market (including Japan) growing by 30% in revenue.
The US made up 26% of the monthly active users in 2017 whereas they made up 25% of users in 2018. However, monthly users increased marginally by 2% in 2018. This indicates that despite a user base that is growing quite slowly, the international markets are spending more to advertise on Twitter.
The decision on the investment health of this company is therefore not how many users continue to sign up but how well the company is using its existing base to entice advertisers. Twitter has continued to improve its target marketing system to help advertisers in making marketing campaigns. As such, this may be a good investment to add into your portfolio with advertising going digital.