After enjoying phenomenal growth during the pandemic, Amazon has struggled to contain costs as inflation and rising interest rates have taken their toll. The company has slowed the rollout of new facilities, leased out some warehouse space, and enacted a hiring freeze in parts of its business. Are Amazon Shares dropping nearly 20% after the company predicts weaker holiday sales?
Amazon sees a 2% to 8% growth in sales for the fourth quarter of the year, way below the previous two years. Amazon sales are slowing globally particularly in Europe, amid the Ukraine war. Amazon’s share price fell 12.7% to $96.84 in after-hours trade. Amazon, the world’s largest online retailer, said: “it expects sales for the holiday quarter to come in at $140 billion to $148 billion”.
Are Amazon Shares Drop Nearly 20% After Weaker Holiday Sales?
Amazon has returned to profitability after two consecutive quarters of losses this year, but shares tanked as the company anticipates weaker holiday sales. The company said its all-important holiday shopping season would be smaller than expected. The company is the latest tech giant to disappoint Wall Street this week. Despite the recovery, the online retailer‘s shares dropped by 20% in after-hours trading due to weaker-than-expected revenue.
For the three months ending on 30 September, Amazon reported sales of $127.1billion, slightly less than analysts had expected. The company made a profit of $2.9 after two quarters of losing money. But it was Amazon’s guidance on the holiday quarter that worried investors.
Amazon said it expected net sales of between $140bn and $148bn in the fourth quarter, and analysts were expecting sales to come in at $155.15bn. The retailer said it made a profit of $2.9 billion, or 28 cents per share, for the three-month period that ended on September 30. That marks a decline compared with a profit of $3.15 billion, or 31 cents per share.
Amazon shares drop nearly 20% after company predicts weaker holiday sales … @dominicru @thetimes https://t.co/TCrx29ESyG
— John Ashcroft (@jkaonline) October 28, 2022
Amazon.com Inc on Thursday forecasted a slowdown in sales growth for the holiday season and warned that inflation-wary consumers and businesses had less money to spend. Amazon hosted not one, but two cornerstone sales events in a year: Prime Day in July, and the Prime Early Access Sale this month. But the net sale is less than expected. That’s the reason Amazon shares drop nearly 20% after the company predicts weaker holiday sales.
What is Amazon’s CEO Say before Dropped of Shares?
Amazon CEO Andy Jassy said: “A lot is happening in the macroeconomic environment, and we’ll balance our investments to be more streamlined without compromising our key long-term, strategic bets.
What won’t change is our maniacal focus on the customer experience, and we feel confident that we’re ready to deliver a great experience for customers this holiday shopping season.
Andy Jassy, Amazon’s chief executive, said he was “encouraged by the steady progress we’re making on lowering costs in our store’s fulfillment network and have a set of initiatives that we’re methodically working through that we believe will yield a stronger cost structure for the business moving forward.
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