Amazon shares dropped close to 20% in after-hours trading on Thursday after 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. 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.
For the three months ending on 30 September, Amazon reported sales of $127.1bn, slightly less than analysts had expected. The company made a profit of $2.9bn 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.
Andy Jassy, Amazon’s chief executive, said he was “encouraged by the steady progress we’re making on lowering costs in our stores 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.
“There is obviously a lot 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.”
Amazon’s results follow disappointing figures from its Big Tech peers. Facebook parent Meta’s share price fell to multi-year lows this week after reporting its second consecutive quarter of declining revenues and warning of rising costs and losses at its metaverse unit. Alphabet and Microsoft’s share prices have fallen after forecasting slower sales growth.
In July Amazon reported its second quarterly loss in a row, much of the loss was due to its investment in Rivian Automotive, a struggling electric vehicle manufacturer, but rising costs and slowing sales also dragged down sales at its online store business.