Amazon Feeling Pinch From Inflation, Recession Fears: Wedbush

Amazon’s Q2 revenue, outside of its Amazon Web Services cloud platform business, could decline 2.5%-5% year on year, Wedbush analyst Michael Pachter wrote investors Monday, citing macroeconomic challenges, currency translation and recession fears. Wedbush’s estimate for Amazon June quarter revenue was $121 billion, which could be “optimistic,” Pachter said, “due to an aggressive Q2 uptick in the U.S. inflation rate,” which reached a four-decade high at 9% in June. Rising inflation could benefit Amazon’s retail business by resulting in higher pricing and marketplace fees, said the analyst, citing the University of Michigan’s Consumer Sentiment Index reporting the lowest U.S. consumer sentiment last month since 1952. Labor costs could weigh on Amazon’s profits due to high attrition rates and about 11.5 million unfilled U.S. job vacancies in Q1, Pachter said. Longer term, Amazon should benefit from "steady margin expansion" driven by its cloud and ads businesses. Amazon reports earnings Thursday.