Amazon's Q3 Revenue Likely to Hit Low End of Guidance: Analyst

Amazon’s Q3 revenue could fall at the low end of guidance due to currency translation and macroeconomic challenges, when the company reports earnings Thursday, Wedbush analyst Michael Pachter wrote investors Monday. Amazon's guidance on its July earnings call was for revenue of $125 billion-$130 billion, including about $5.2 billion of negative impact from foreign currency exchange rates. The dollar strengthened in the quarter, “likely causing a more substantial headwind than management expected,” which Wedbush believes could take foreign currency translation losses above $1 billion for the quarter. The analyst expects about $4.5 billion in additional revenue from the July Prime Day event, though that could be dampened by currency exchange impact and macroeconomic challenges. Amazon’s Prime subscription hike -- from $119 to $139 annually, or $12.99 to $14.99 monthly -- is expected to add $500 million in subscription revenue growth for Q3, while Wedbush expects Amazon Web Services to post $1 billion growth. Looking to Q4, the stronger dollar could have a favorable impact on import pricing, and high employment will keep consumer discretionary spending strong into the holiday season, Pachter predicted, offsetting negative impacts. Wedbush expects Amazon to give Q4 sequential revenue growth guidance in the “mid- to high-teens,” vs. the typical rate of 20% or more.