Amazon shares fell to levels not seen in more than two years in after-hours trading after the ecommerce juggernaut reported revenue that fell short of analyst expectations on Thursday, becoming the latest casualty of an earnings season that has tanked the value of some of technology’s biggest players, as fears of an impending recession cut into growth expectations.
Key Facts
Amazon reported revenue of $127.1 billion in the third quarter, slightly less than the $127.5 billion expected by analysts, while net income fell to $2.9 billion, or $0.28 per share, a 9% decrease from the previous year.
Following the announcement, shares fell more than 18% to less than $90 in after-hours trading, bringing the stock to its lowest level since early 2020 and nearly 50% lower for the year—far worse than the 32% drop on the tech-heavy Nasdaq.
Amazon CEO Andy Jassy acknowledged in a statement that “uncertain economic times” have forced the company to cut costs across its fulfilment network, and also predicted the company will make about $144 billion in sales this quarter, compared to analysts’ expectations of $155 billion.
Additionally, the company reported that sales of its fast-growing Amazon Web Services segment grew 28% in the quarter, falling short of expectations for growth of more than 30%.
“AWS is the company’s heart, and any weakness there will raise a huge red flag,” Vital Knowledge Media analyst Adam Crisafulli said in an emailed comment, noting that the segment has been driving the majority of Amazon’s stock gains during the pandemic.
Key Background
Global economies have begun to slow as central banks, such as the Federal Reserve, work to combat inflation by dampening consumer demand with higher interest rates. Recent earnings reports have begun to reflect the pressures, and it has been especially bad for technology behemoths. Alphabet stock fell on Tuesday after the Google parent company missed third-quarter sales and profit targets. Then, on Wednesday, Meta reported similarly disappointing earnings, sending the social media company’s stock down nearly 25%.
Forbes Valuation insight
$134.8 billion. That’s how much Amazon founder Jeff Bezos was worth when the market closed on Thursday. At one point worth more than $200 billion, Bezos’ fortune has cratered alongside shares of Amazon, which peaked at more than $188 last year but have since fallen 53%.
