Amazon shares fall nearly 20% on holiday quarter sales forecast



CNN

Amazon ( AMZN ) shares fell nearly 20% in after-hours trading Thursday after the company forecast that its holiday quarter sales would be weaker than analysts expected.

The e-commerce giant said it expects revenue for the final three months of the year to be between $140 billion and $148 billion, below the $155 billion expected by analysts polled by Refinitiv. The weaker forecast comes as rising inflation and recession fears are weighing on consumers’ purchasing decisions.

Amazon reported third-quarter revenue of $127.1 billion, up 15% from a year earlier, but just missing Wall Street estimates.

“There is clearly a lot going on in the macroeconomic environment, and we will balance our investments to be more agile without compromising key long-term strategic bets,” Amazon CEO Andy Jassy said in a statement accompanying the earnings release.

The company reported that sales of its Amazon Web Services segment increased 27% year-over-year to $20.5 billion, a slower pace of growth than Wall Street had expected.

But Amazon’s cloud computing division remains a strong profit driver for the company. Amazon posted a profit of $2.9 billion for the three months, a far improvement from the previous quarter, when it posted a net loss of $2.0 billion, largely due to its investment in electric vehicle maker Rivian.

The final results have come at a precarious time for the e-commerce giant. Amazon initially saw its business boom during the pandemic as more consumers relied on online shopping. This year, however, the company faces a return to in-person shopping, as a grim economic outlook has dampened consumer demand.

Jesse Cohen, a senior analyst at Investing.com, said Amazon’s earnings report “demonstrates that it is not facing the challenges facing the tech industry at large in the face of worsening macroeconomic headwinds, such as rising inflation and concerns about a possible recession.”