Earnings Spotlight - Amazon (AMZN)
Amazon (AMZN) continues a busy month of earnings announcements. The majority of big tech companies report this week (GOOGL, MSFT, TSLA, META) and next week (AMZN, AAPL).
Amazon has had a strong start to the year, with investors eagerly awaiting the company’s first-quarter earnings announcement scheduled for after the bell on Tuesday, April 30th. AMZN stock has risen 14% year-to-date, and both the first-quarter fiscal results and the outlook for the rest of the year are highly anticipated by traders looking for guidance from the tech giant.
Let’s take a closer using Option Alpha’s earnings tool that shows analyst’s expectations, stats covering the stock’s historical earnings results, the average move up or down for the stock after a beat or miss (1 day and 5 days after), and many other useful stats to help us make more informed trading decisions across earnings announcements.
Here is a breakdown of Amazon’s earnings forecast for their first earnings report of the year on Tuesday, April 30, after the market closes.
AMZN Q1 earnings forecast
The consensus estimate for Amazon earnings is $0.83 EPS on $142.48B revenue. Analysts project Amazon to beat estimates by 3.94%.
AMZN earnings expectations
- Consensus estimate for AMZN earnings is $0.83 per share on $142.48B revenue
- Analysts project that AMZN will beat estimates by 3.94%
AMZN’s expected move after earnings is +/- 10.08%. Below we’ll compare this expectation with their historical price movement after earnings.
AMZN 5-year historical stats
According to the five-year data, AMZN has a strong record of beating EPS and revenue estimates, but beat on both in the same report about half the time. Their miss rate on both is only 10%.
In the last 20 quarterly earnings reports, Amazon has beat EPS estimates 13 times and beat revenue projections 15 times. AMZN beat estimates for both EPS and revenue in 10 earnings reports the last five years and missed on both only twice.
AMZN earnings data
- AMZN beat earnings per share (EPS) estimates 65% of the time in the past five years.
- AMZN beat revenue estimates 75% of the time in the past five years.
- AMZN beat both EPS and revenue estimates 50% of the time and missed on both 10% of the time in the past five years.
AMZN has beat projections four straight earnings reports, bettering analyst estimates in all four announcements in 2023.
For their last earnings report on February 1st, 2024, AMZN reported an EPS of $1.00 on revenue of $ 169.96 billion, beating estimates by 25.35%.
AMZN performance post-earnings
Despite a strong record of outperforming analyst’s EPS and revenue expectations, Amazon stock has produced inconsistent results in the day and week following earnings announcements.
AMZN stock has increased one day after earnings only 40% of the time, and the stock price has a five-day win rate of just 45%.
View AMZN earnings projections and historical stats for the past 5 years in Option Alpha
AMZN earnings: Stock price expected move vs. actual move
AMZN expected move is +/- 10.14%.Â
The expected move is the amount that a stock is expected to move up or down from its current price, as derived from current options prices. The expected move is calculated using the implied volatility of the at-the-money call and put options in the expiration immediately following the earnings report.
The next expiration date following Amazon earnings is Friday, May 3rd, three days after AMZN reports.
We can see in the images above that Amazon’s average move one day after earnings is +/- 7.17%, and the average move five days after earnings is +/- 10.10%.
Earnings implied volatility & options pricing
Implied volatility (IV) is the expected price movement in a security for a specific forward-looking period of time.
As implied volatility increases, options prices increase because the expected price range of the underlying security increases.
Buyers of options benefit from increasing implied volatility, while options sellers benefit from decreasing IV.
See the Three Best Option Strategies for Earnings
Earnings IV crush
Implied volatility typically rises before earnings and the contracts expiring shortly after the announcement become more expensive. Immediately following the earnings report, options prices decline as volatility drops.
This is known as IV crush.
The chart below highlights an example of IV crush after NVDA earnings. Despite any significant price change, we can see implied volatility drop after each of Apple's earnings announcements.
More stats from Option Alpha’s earnings tool
Here’s a look at some key metrics using the May 3rd expiration date for AMZN options. This data can help inform investor’s decisions when thinking about earnings trades.
Max Pain
Max pain is the strike price at which the maximum number of options would expire worthless for a given expiration. This price has the most open call and put option contracts for a symbol’s expiration date, and, theoretically, should the stock close at this price on expiration, most option traders would lose money. This is why it’s often referred to as the “max pain” in options trading.
AMZN's max pain for the May 3rd expiration immediately following earnings is the 177.50 strike price.
Historical vs Implied Probability of Expiring ITM
This chart is a visual representation of historical volatility (HV) vs implied volatility (IV).
It shows the probability of expiring in-the-money (ITM) using the stock’s HV and then calculates the probability of the stock’s price at expiration using IV.
Implied Volatility Skew
Skew highlights different strike prices’ implied volatility. Generally, OTM and ITM options exhibit higher IV.Â
We can see IV skew in these AMZN option contracts, where the OTM put options have much higher implied volatility than ATM contracts, likely because investors are looking to hedge their long stock against potentially volatile price action after earnings.
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