Amazon Stock Drops 13% on Weak Holiday Forecast and Missed Revenue
Amazon shares fall sharply after the company issues a disappointing fourth-quarter revenue forecast and misses third-quarter expectations. The tech giant faces ongoing macroeconomic headwinds and a slowing retail business.
Amazon shares plummet 13% in extended trading after the company issues a disappointing fourth-quarter forecast and misses third-quarter revenue expectations. The tech giant reports third-quarter revenue of $127.10 billion, falling just short of the $127.46 billion estimate, while posting earnings of 28 cents per share. Additionally, Amazon Web Services generates $20.5 billion, missing the expected $21.1 billion.
The company projects fourth-quarter revenue between $140 billion and $148 billion, representing year-over-year growth of just 2% to 8% and falling well below analyst expectations of $155.15 billion. Like other Big Tech companies, Amazon faces significant macroeconomic headwinds, soaring inflation, and rising interest rates. These challenges coincide with a clear slowdown in Amazon's core retail business as consumers shift back to shopping in physical stores.
Under CEO Andy Jassy, Amazon responds to rising expenses by aggressively cutting costs across multiple divisions. The company sheds warehouse space, halts experimental projects, shuts down its telehealth service, and freezes corporate hiring in its retail division. Jassy states that Amazon balances its investments to be more streamlined without compromising its key long-term strategic bets, while the CFO notes a significant reduction in the capital expenditures budget.