What to Expect When Amazon Reports Earnings This Week and How Traders Can Capitalize on the Volatility

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Amazon.com Inc.'s (AMZN) Q4 2024 earnings report, scheduled for February 6th after market close, comes at a pivotal moment for the e-commerce and cloud leader. Key areas of focus include AWS growth rates amidst the AI boom, retail margin improvements, and the rapidly growing advertising segment. Investors will also watch for updates on Prime membership trends and the company's progress in streamlining its massive logistics network.

In addition to these core metrics, market participants are eyeing Amazon's operating leverage gains after last quarter's impressive 55.6% jump in operating income to $17.4 billion. The success of Prime Big Deal Days and growing high-margin businesses like advertising have reinforced investor confidence in the company's profit expansion.

As one of the most actively traded stocks in the market, AMZN often sees significant price swings around earnings releases. For traders looking to capitalize on this increased volatility, whether bullish or bearish, Direxion's Single Stock Daily Leveraged & Inverse ETFs provide targeted tools for earnings-focused trading.

What to Expect from Amazon's Next Earnings Report

Analysts expect Amazon to deliver earnings of $1.52 per share, marking a dramatic 52.5% increase from last year's $1.01. The company enters this report with strong momentum, having topped Wall Street's expectations in each of the past four quarters. AWS's 19.1% revenue growth and a 19% surge in advertising revenue highlight the strength of Amazon's high-margin businesses.

October's Q3 results sparked a 6.2% stock gain as the company reported impressive numbers across all segments. Total revenue grew 11% to $158.8 billion, while the successful Prime Big Deal Days event demonstrated Amazon's continued retail dominance. The stock's 44.5% gain over the past 52 weeks has outpaced both the S&P 500 and its sector peers.

Amazon's Earnings Track Record

The e-commerce leader has consistently beaten expectations, with earnings surprises ranging from 17.14% to 36.14% over the past four quarters. Last quarter's performance highlighted Amazon's profit expansion story, with operating income jumping 55.6% year-over-year to $17.4 billion. AWS maintained its cloud leadership while advertising revenues set new records.

Trading Tools for Amazon's Multi-Sector Story

Amazon's diverse businesses - from cloud computing to retail to digital ads - create unique trading opportunities around earnings. Direxion's Single Stock Daily Leveraged & Inverse ETFs, introduced in September 2022, let traders position for moves in either direction without the complexities of margin or short-selling.

Bullish Strategy: AMZU

The Direxion Daily AMZN Bull 2X Shares (AMZU) lets traders double down on Amazon's growth story. AMZU aims to deliver twice the daily moves of AMZN stock through a carefully managed portfolio. Since launch, it's become particularly active during earnings seasons.

• Targets 200% of AMZN's daily performance
  • 1% gain in Amazon stock aims for 2% gain in AMZU (before fees)
  • 1% drop in Amazon stock aims for 2% drop in AMZU (before fees)
• Designed for traders betting on positive earnings catalysts
• Peak activity during quarterly announcements
• Substantial liquidity with 870,000 shares traded daily
• Best suited for active position management

Bearish Strategy: AMZD

The Direxion Daily AMZN Bear 1X Shares (AMZD) provides a straightforward way to trade potential declines without short-selling*. This makes AMZD especially valuable for retirement account traders who want bearish exposure but face IRA and 401(k) restrictions on short selling.

• Moves opposite to AMZN's daily performance
  • When Amazon falls 1%, AMZD aims for 1% gain (before fees)
  • When Amazon rises 1%, AMZD aims for 1% decline (before fees)
• Essential tool for retirement accounts seeking downside exposure
• Strategic positioning around earnings releases
• Steady liquidity with 119,000 shares traded daily
• Efficient way to hedge Amazon-specific risk

These ETFs offer powerful ways to trade Amazon's earnings, with mechanics distinctly different from holding AMZN directly. These products reset daily and aren't designed for long-term holding, making them best suited for active traders who understand leverage dynamics and can monitor positions closely.

*Short-selling is a trading strategy where investors borrow shares and sell them, hoping the stock price will fall.

Investing in the funds involves a high degree of risk. Unlike traditional ETFs, or even other leveraged and/or inverse ETFs, these leveraged and/or inverse single-stock ETFs track the price of a single stack rather than an index, eliminating the benefits of diversification. Leveraged and inverse ETFs pursue daily leveraged investment objectives, which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying stock's performance over periods /anger than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. The Funds will Jose money if the underlying stock's performance is flat, and it is possible that the Bull Fund will Jose money even if the underlying stock's performance increases. and the Bear Fund will lose money even if the underlying stock's performance decreases, over a period longer than a single day. Investing in the Funds is not equivalent to investing directly in AMZN.

An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.

Direxion Shares Risks – An investment in a Fund involves risk, including the possible loss of principal. Each Fund is non-diversified and includes risks associated with a Fund concentrating its investments in a particular security, industry, sector, or geographic region which can result in increased volatility. A Fund’s investments in derivatives such as futures contracts and swaps may pose risks in addition to, and greater than, those associated with directly investing in securities or other investments, including imperfect correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility and lack of availability. As a result, the value of an investment in a Fund may change quickly and without warning.

Leverage Risk – The Bull Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with AMZN and may increase the volatility of the Bull Fund.

Daily Correlation Risk – A number of factors may affect the Bull Fund’s ability to achieve a high degree of correlation with AMZN and therefore achieve its daily leveraged investment objective. The Bull Fund’s exposure to AMZN is impacted by AMZN’s movement. Because of this, it is unlikely that the Bull Fund will be perfectly exposed to AMZN at the end of each day. The possibility of the Bull Fund being materially over- or under-exposed to AMZN increases on days when AMZN is volatile near the close of the trading day.

Daily Inverse Correlation Risk – A number of factors may affect the Bear Fund’s ability to achieve a high degree of inverse correlation with AMZN and therefore achieve its daily inverse investment objective. The Bear Fund’s exposure to AMZN is impacted by AMZN’s movement. Because of this, it is unlikely that the Bear Fund will be perfectly exposed to AMZN at the end of each day. The possibility of the Bear Fund being materially over- or under-exposed to AMZN increases on days when AMZN is volatile near the close of the trading day.

Amazon.com, Inc. Investing Risk — Amazon.com, Inc. faces risks associated with intense competition across different industries, including physical, e-commerce omni channel retail, e-commerce services, web and infrastructure computing services, electronic devices, digital content, advertising, grocery, and transportation and logistics services; the expansion into new products, services, technologies and geographic regions; its international activities; the variability in the demand for its products and services; fraudulent and unlawful activities of sellers; intellectual property rights; successfully optimizing and operating its fulfilment network and data centers; data loss or other security breaches; maintaining and hiring necessary key management personnel; maintaining good supplier relationships; the success of acquisitions or joint ventures or other investments; its rapidly evolving and expanding business model; and legal, regulatory, tax liability and litigation issues.

Consumer Discretionary Sector Risk —Companies in the consumer discretionary sector are tied closely to the performance of the overall domestic and international economy, including the functioning of the global supply chain, interest rates, competition and consumer confidence.

Additional risks of each Fund include Effects of Compounding and Market Volatility Risk, Derivatives Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Industry Concentration Risk, Market Risk, Indirect Investment Risk, and Cash Transaction Risk. Additionally, for the Direxion Daily AMZN Bear 1X Shares, Shorting or Inverse Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of a Fund.

Distributor: ALPS Distributors, Inc.

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