Sell or Hold Before July 31 Earnings?

Wall Street and Silicon Valley are gearing up. Amazon is one of the most significant companies in the world, and it will release its long-awaited earnings on July 31, 2025. With event-driven traders flipping and flopping on the idea of buying or selling Amazon (AMZN) stock ahead of the numbers hitting the wire, the most straightforward question to ask is deceptively tricky to answer: Is it better to sell before the numbers hit the wire or ride this one out?

A History of Uncertainty

Drama has always been synonymous with Amazon earnings days. In 63% of the cases during the last five years, the stock has had a negative performance the day after its earnings release. The average daily drop was impressive -4.7%, and the most significant post-earnings drop was tremendous -14%. The trend indicates that, to most short-term traders, discretion has been a better part of valour when dealing with quarterly figures relating to Amazon.

These figures are essential to event-driven investors who tend to utilize past odds and trading trends. These trends often inform pre-earnings manoeuvres, or the actions of traders willing to take positions before the results to profit off anticipated volatility. In the meantime, some are happy to wait and see the dust of the earnings settle, inspecting instant and medium-term returns that come after the official report.

What is on the line this Quarter?

Susquehanna analysts predicted that Amazon had to live up to analyst expectations in their upcoming earnings with an optimistic target of $33 in its earnings per share, with a figure of $162 point one billion in sales. To provide some context, at the same time last year, Amazon reported $1.26 per share on sales of $147.98 billion. That is a preeminent year-over-year increase of nearly $15 billion in sales per quarter, a tribute to the long-term engine of growth at Amazon.

However, it is not necessarily just about revenue. Investors will monitor profit indicators. In the last year alone, Amazon has earned a staggering $650 billion, an enormous operating profit of $72 billion, and an equally impressive net income of $66 billion. 

It would be a trillion-dollar story, with the company currently boasting a market capitalization of $2.46 trillion, something that puts it in the same band as Apple and Microsoft.

Why does Amazon stock sell off so frequently in response to earnings, even when above consensus? 

In part, the solution resides in the extremity of expectations. Amazon is essentially a perpetually priced-to-perfection, well-established company with enormous resources and a proud history of innovations. Even when the headline numbers are substantial, the slightest miscue in the earnings guide, margin pressure, or a less-than-anticipated growth in business units can cause shares to fall.

Furthermore, the size and complexity of Amazon operations imply that various divisions of the company can experience opposite trajectories within a quarter. As an illustration, strong trading in AWS or advertising may be dominated by pressure on margins in retail or transportation issues.

Pre-Earnings Positioning

Driven by the urge to take action before the report comes out, history provides grim statistics: Almost two out of three times, Amazon stock has fallen post earnings. Still, nothing is written yet; should Amazon exceed the top line and provide solid guidance, the short-term hurt might become an impressive win on the part of the few who dare to stay, even in case the overall market takes on a more positive outlook.

The Amazon Comparison

The $2.46 trillion valuation of Amazon is not merely a number, but a sign of miraculous belief by the investing community. Over the past year, the company has boasted sales of $650 billion. The figures are revenues that exceed the GDP of most countries and underscore the ever-larger footprint Amazon is building not only in various online retail but also streaming, advertising, and cloud infrastructure. Its operating profit amounted to $71.691 billion. 

To others, stock fluctuations may be excessive. Trefis recommends investors interested in upside with low volatility to purchase their High-Quality portfolio, which has returned more than 91% since inception and outperformed the S&P 500. It is a reminder that although trading costs and earnings are material incentives to purchasing, diversified portfolios regularly punish impatience and lack of portfolio rebalancing.

Looking Ahead

Where is Amazon and its investors heading? The indicators all point to future domination so long as the company performs. July 31 consensus estimates are projecting record sales, and the long-term perspective is sound, with cloud, logistics, and advertising. However, it is challenging to overlook the post-earnings dip tendency. Close risk evaluation is essential to the short-term trader; perhaps even a monster quarter could result in the stock retracing, only to continue upward.

Long-term shareholders, on the other hand, might want to seek comfort in the immense size and growth trajectory of Amazon. Their innovation machine is unsurpassed, and their market share recorded in key areas is steadily rising. With patience and a value orientation, waiting through short-term turbulences might reward patient buyers with plenty of opportunities rather than selling moments.

What becomes immediately apparent as we count down to the following report of Amazon is that a quiet day in this tech giant is a rare occurrence. Thursday figures will represent another critical data point in the constantly changing narrative of Amazon and, to investors, another test of patience, analysis, and nerve.