As Amazon Reports Third-Quarter Earnings, Its Holiday Outlook Will Take Center Stage

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When eBay reported its third-quarter earnings last week, its “cautious outlook” for the holiday season spooked both Wall Street analysts and the wider e-commerce industry, sending its shares down more than five percent.

The company’s CFO Bob Swan warned of “dramatically decelerating U.S. e-commerce growth,” citing comScore data that shows that the U.S. online retail market grew just 13 percent in the third quarter, down from a 16 percent mark in the second quarter.

So, when Amazon reports its own third-quarter earnings later today, its guidance for the fourth quarter will obviously be taking on extra weight.

On Oct. 1, the company said it was adding 40 percent more holiday workers to its distribution network than it did last holiday season, which was largely seen as a positive sign for holiday shopping. But, as Swan noted on eBay’s earnings call, the government shutdown that followed over the first 17 days of this month seemed to take its toll on shoppers’ psyche.

As a result, it’s possible that the rosy picture painted by the hiring announcement isn’t shining as bright right now.

That said, Amazon is largely in a league of its own, continually outperforming the growth of the U.S. e-commerce industry as a whole. As such, analysts are expecting on average that Amazon’s third-quarter revenue grew 22 percent year over year, to $16.8 billion.

Not surprisingly, Amazon is expected to once again post a loss – nine cents per share is the estimate. But, as long as Jeff Bezos’s retail juggernaut continues its impressive top-line growth as it enters new categories such as art, groceries and flowers that may lead to even greater growth, investors seem inclined to continue to boost its stock price.

The proof: Amazon lost money in 2012, as well as in the second quarter of this year, when analysts were expecting a profit, and its stock price is still up 39 percent over the last 12 months.