After the closing bell on Thursday, internet retailer Amazon.com (NASDAQ: AMZN) will step into the earnings spotlight. Experts believe that Amazon will report third-quarter earnings of 33 cents per share with revenue of $5.03 billion. Amazon forecast third-quarter revenue of $4.75 billion to $5.25 billion. In last year's third quarter, Amazon earned 27 cents per share with revenue of $4.26 billion.
With the economy struggling, what should we expect from Amazon? Reportedly, ThinkEquity saw traffic data that implies Amazon's unique visitors rose 23% in the latest quarter. If this is the case, the retailer's sales should have received a bit of a push in the quarter, which could lead to higher earnings. In fact, the ThinkEquity analyst (Ed Weller) told the Associated Press that he expects Amazon to report earnings of 35 cents per share on revenue of $5.13 billion.
The problem here is that there is a chance that expectations could set up Amazon for a bit of a fall. If a majority of investors expect Amazon to easily top expectations on both earnings and revenue, the company could suffer if it were to barely top expectations. When expectations are heightened, disappointment could easily follow.
Technically, Amazon is positioned atop its 10-, 20-, and 50-week and month moving averages, which affords various levels of potential support. The problem is that the stock has to drop into the $90 region to test the first layer of potential support (the stock is currently trading in the $93 region). If the earnings disappoint, then the stock could drop; the good news is that the 10-week trendline is in the $90 region, which could set a floor on any potential backtracking by the stock. That said, there is a chance that the $95 level could act as a ceiling to any potential rally. The stock has backed away from this region in the past, and is engaged in a struggle with this resistance as the post-session earnings report looms.
The stock has fared well thus far in 2009, with the shares turning in only two negative months. Let's see if this trend can continue after Amazon's earnings report.
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