Amazon on pace for worst day since March 2020 after earnings disappoint

Shares of Amazon dipped more than 7% in early trading Friday after the company on Thursday reported disappointing second-quarter results and gave weak guidance for the current quarter, suggesting recent pandemic-fueled momentum is slowing.

The stock is on pace for its worst day since March 12, 2020, when it plunged 7.92%.

Amazon warned it expects to see slower growth continue for the next few quarters, as it laps tough year-over-year comparisons to its business during Covid-19 lockdowns.

Many consumers avoided physical stores in order to prevent spreading the virus and flocked to digital retailers like Amazon for both essential and non-essential goods during the pandemic. Over the past few months, the economy has continued to reopen, pushing some shoppers back to stores, while they also shift to spending more on travel and other services.

Investors acknowledged the slower growth will put Amazon shares under pressure in the near term, but several analysts said they remain confident that e-commerce as a whole will continue to grow, benefiting Amazon as a result.

"AMZN reported revenue and [operating income] that were 2% and 1% below consensus and guided 3Q below," Barclays analyst Ross Sandler wrote in a note to clients on Friday. "This kind of miss is a rare occurrence for a high quality name like AMZN, but forecasting the back side of the pandemic surge is proving challenging for many companies, and despite the deceleration, AMZN continues to add prime members and gain e-commerce share. This print won't derail the long-term bull case around [Amazon Web Services] and retail, but likely means we are range bound for the next few months until a catalyst emerges."

In a separate note to clients, Baird analysts wrote, "we never like to see a miss." But they pointed to outperforming results in Amazon's other, more profitable segments like advertising, cloud-computing and subscription services as the "more notable" standout in the company's earnings.

"This is the quasi-recurring model we've highlighted as deserving of a higher multiple," said Baird analyst Colin Sebastian.

Amazon shares are up more than 3% since the start of the year. The S&P 500 has risen roughly 18.6% over the same period.