Amazon shares drop by 20% after the company predicts weaker holiday sales
As-hours trading on Thursday saw a nearly 20% decline in Amazon stock after the brand revealed that its crucial holiday shopping season will be lower than anticipated.
The business is the newest digital juggernaut to let Wall Street down this week. Amazon experienced great growth during the pandemic, but since then, expenditures have gotten out of control due to inflation and rising loan rates. The development of new facilities has been slowed down, some warehouse space has been rented, and the corporation has implemented a hiring freeze in some areas of its operations.
Amazon reported revenues of $127.1 billion for the three months that ended on September 30. This was somewhat less than analysts had predicted. After losing money for two quarters, the corporation generated a $2.9 billion profit. Investors were particularly alarmed by Amazon’s guidance for the holiday period.
Analysts were anticipating sales of $155.15 billion, while Amazon stated that it expects net sales of between $140 billion and $148 billion in the fourth quarter.
The chief executive of Amazon, Andy Jassy, stated that he was “encouraged by the steady progress we are making on lowering costs in our stores fulfilment network and have a set of initiatives that we are methodically working through that we believe will yield a stronger cost structure for the business moving forward.
Amazon’s earnings come after its Big Tech competitors’ poor numbers. This week, after announcing its second consecutive quarter of declining revenues and issuing a warning about mounting costs and losses at its metaverse division, Facebook parent company Meta’s share price dropped to multi-year lows. After predicting slower sales growth, Alphabet and Microsoft’s stock prices have dropped.
Amazon posted its second consecutive quarterly loss in July. The company attributed a large portion of the loss to its investment in Rivian Automotive, a faltering maker of electric vehicles, but increased prices and sluggish sales also hurt the company’s online store operation.
