Amazon shares fall 14% on holiday quarter sales forecast

Amazon shares fell about 14% in Thursday’s trading after the company predicted its holiday quarter sales in the United States would be lighter than analysts had expected.

The e-commerce giant said it expects revenue for the last three months of the year to be between $140 billion and $148 billion, significantly below the $155 billion that analysts polled by Refinitiv had expected. The weakest forecast comes as rising inflation and fears of an impending recession weigh on consumer buying decisions.

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

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

The company said its sales in the Amazon Web Services segment rose 27% year-over-year to $20.5 billion – representing a slower pace of growth for a business unit closely watched 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 in the three-month period, much better from the previous quarter, when it posted a net loss of $2 billion largely due to its investment in electric vehicle maker Rivian.

The latest results come at a precarious time for the e-commerce giant. Amazon initially saw its business boom during the pandemic as more consumers trusted online shopping. This year, however, the company is facing a shift back to in-person shopping, as well as a grim economic outlook that has dampened consumer demand.

Jesse Cohen, a senior analyst at Investing.com, said that Amazon’s earnings report “proves that it is not immune to the challenges facing the tech industry at large as it grapples with increasing macroeconomic difficulties such as rising inflation and concerns about a possible recession”, he says.