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Amazon stock came down to 13% on fragile fourth-quarter suggestions

Amazon stock came down to 13% on fragile fourth-quarter suggestions

November 2, 2022: On Thursday, Amazon shares plunged 13% in extended trading following the company issued a disappointing fourth-quarter forecast and missed revenue estimates.

Amazon expects to post fourth-quarter revenue of $140 billion and $148 billion, representing a year-over-year growth of 2% to 8%. Analysts were anticipating sales to come in at $155.15 billion, the Refinitiv said.

Revenue increased 15% in the third quarter, which marks a return to double-digit deals expansion, but it still decreased short of Wall Street’s projections.

Like the rest of Big Tech, Amazon’s rocky year as it encounters macroeconomic headwinds, increasing inflation, and rising interest rates. Those challenges coincide with a slowdown in Amazon’s core retail as consumers return to shopping in stores.

It’s the second time this year that Amazon’s results have disappointed to spark a double-digit percentage selloff, a weak forecast for the second quarter leading to a 14% drop in the stock.

Amazon CFO Brian Olsavsky added that the company cut its capital expenditures budget this year by a third, after spending heavily over the previous two years on ramping up its fulfillment and logistics network to meet pandemic-induced demand.

The company is taking steps to “tighten our belt, which include pausing which hires in certain businesses and winding down developments and services where we trust our resources are spent anywhere,” Olsavsky said.

He further said that the economic environment in Europe was more alarming in the quarter than North America as the “Ukraine war and the energy crisis issues have compounded in that geography.”

Amazon’s forecast doesn’t bode well for the holiday shopping period. According to Adobe, analysts are girding for a humdrum season, with online sales expected to increase just 2.5%.

Amazon’s Prime Early Access Sale could help year-end juice sales. Jassy added in the release that customer response to the recent discount event and Prime Day, managed in July, was “quite positive.” Data collected by third-party reviewers signaled the event may have been lackluster, as shoppers feel the force of inflation.

Amazon is rounding out a disappointing payments week for Big Tech. Alphabet and Facebook parent Meta posted earnings that fell short of expectations in navigating challenges in the digital ad market. Microsoft wasn’t immune, which reports softer-than-expected cloud revenue and weak quarterly advice.

Apple also beat earnings and revenue but came short in core product categories, which include the iPhone business and services. The stock is changing lower after hours.

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