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What Happened in the Stock Market Today

By Jim Crumly – Apr 27, 2018 at 5:09PM

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On a flat day for the markets, Amazon and Expedia both made gains.

Stock prices went mainly sideways on low volume Friday after a busy week of earnings reports. The Dow Jones Industrial Average (^DJI -1.71%) fell slightly while the S&P 500 (^GSPC -1.51%) managed a small gain.

Today's stock market

Index Percentage Change Point Change
Dow (0.05%) (11.15)
S&P 500 0.11% 2.97

Data source: Yahoo! Finance.

Rate-sensitive utility stocks advanced as long-term interest rates continue a two-day decline. The Utilities Select SPDR ETF (XLU -1.93%) rose 1%. Energy stocks pulled back after recent gains, with the SPDR S&P Oil & Gas Exploration & Production ETF (XOP -0.01%) falling 1.8%.

As for individual stocks, Amazon.com (AMZN -1.57%) shares jumped after the company reported yet another quarter of surprising growth, and Expedia Group (EXPE -0.55%) advanced on better-than-expected bookings.

Rising stock chart superimposed over digital map of the world

Image source: Getty Images.

Amazon turns in another monster quarter

Amazon crushed expectations when it announced first-quarter results yesterday, sending shares up 3.6% today. Sales increased 43% to $51 billion, exceeding its previous guidance, as well as analysts' estimate of $49.9 billion. Earnings per share soared 121% to $3.27. The analyst consensus of $1.27 in EPS wasn't even close.

Sales in North America rose 46%, international sales were up 34%, and Amazon Web Services (AWS) posted a 49% sales gain. Operating income increased 92% to $1.9 billion, compared to Amazon's guidance of $300 million to $1 billion. AWS contributed $1.4 billion of that, up 57% from the period a year earlier.

Online store sales increased 13% excluding currency effects. Commissions and fees from third-party sellers grew 44%, and subscription services revenue, which includes Prime membership fees, jumped 56%.

Looking forward, Amazon plans to increase the annual fee for Prime membership in the U.S. from $99 to $119 starting next month. Second-quarter sales are expected to grow between 34% and 42% and operating income guidance is for a range of $1.1 billion to $1.9 billion, which would be an increase of 139% at the midpoint.

Amazon continues to surprise with yet another stellar quarter featuring rapid top-line growth and even higher operating income growth, thanks largely to AWS. 

Expedia reports strong booking growth

Shares of online travel site Expedia Group jumped 8.2% after the company announced first-quarter revenue that beat expectations on strong bookings growth. Revenue increased 14.6% to $2.51 billion compared with Wall Street expectations of $2.44 billion. Gross bookings grew 15.2% after having increased 13.6% last quarter. Net loss per share came in higher than expected, though -- $0.46 compared with the consensus of a $0.44-per-share loss.

International bookings continue to drive Expedia's results, growing 25% since last year and now comprising 39% of worldwide bookings. Domestic bookings were up 10%. The HomeAway platform continues to perform well, with bookings jumping 46% and revenue up 26% to $234 million. Room nights increased 16% over last year.

In the conference call, CFO Alan Pickerill said that expenses in each category rose faster than revenue "due to a combination of our key strategic initiatives and ongoing investments along with elevated spending at Trivago and a foreign currency impact."

Although adjusted EBITDA fell 40% in the quarter, the company reiterated its guidance for full-year adjusted EBITDA growth of between 6% and 11%, with more than 100% of the growth coming in the second half of the year.

Expedia stock took a hit earlier this week when Trivago, in which Expedia owns a majority interest, reported disappointing earnings and gave a weak outlook. Today's rise more than recouped those losses, perhaps on relief that Expedia's business seems to be on track. Last quarter, the shares sank on a profit disappointment, but investors may now be starting to focus on bookings growth instead.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jim Crumly owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Expedia and TRVG. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$113.00 (-1.57%) $-1.80
Expedia, Inc. Stock Quote
Expedia, Inc.
EXPE
$93.69 (-0.55%) $0.52
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$28,725.51 (-1.71%) $-500.10
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,585.62 (-1.51%) $-54.85
SPDR Series Trust - SPDR S&P Oil & Gas Exploration & Production ETF Stock Quote
SPDR Series Trust - SPDR S&P Oil & Gas Exploration & Production ETF
XOP
$124.72 (-0.01%) $0.01
The Select Sector SPDR Trust - The Utilities Select Sector SPDR Fund Stock Quote
The Select Sector SPDR Trust - The Utilities Select Sector SPDR Fund
XLU
$65.51 (-1.93%) $-1.29

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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