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Author Topic: Amazon stock sinks 13% on weak fourth-quarter guidance  (Read 47 times)
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November 02, 2022, 11:47:03 PM
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  • Amazon reported third-quarter results on Thursday that missed analysts’ estimates.
  • It also gave a disappointing sales forecast for the fourth quarter.
  • The stock sunk in extended trading.

Amazon shares plummeted 13% in extended trading on Thursday after the company issued a disappointing fourth-quarter forecast and missed on revenue estimates.

Here are the key numbers:

  • Earnings: 28 cents per share
  • Revenue: $127.10 billion vs. $127.46 billion, according to Refinitiv estimates

Here’s how the other key Amazon segments did during the quarter:

  • Amazon Web Services: $20.5 billion vs. $21.1 billion expected, according to StreetAccount
  • Advertising: $9.55 billion vs. $9.48 billion expected, according to StreetAccount

Amazon said it expects to post fourth-quarter revenue between $140 billion and $148 billion, representing year-over-year growth of 2% to 8%. Analysts were expecting sales to come in at $155.15 billion, according to Refinitiv.

Revenue grew 15% in the third quarter, marking a return to double-digit sales expansion, but it still fell short of Wall Street’s projections.

Like the rest of Big Tech, Amazon has had a rocky year so far as it confronts macroeconomic headwinds, soaring inflation and rising interest rates. Those challenges have coincided with a slowdown in Amazon’s core retail business, as consumers returned to shopping in stores.

It’s the second time this year Amazon’s results have been disappointing enough to spark a double-digit percentage selloff. In April, a weak forecast for the second quarter led to a 14% drop in the stock.

Under CEO Andy Jassy, who took the helm from founder Jeff Bezos in July 2021, Amazon has responded to rising expenses by aggressively cutting costs across numerous divisions in recent months. It shed warehouse space, halted some experimental projects, shuttered its telehealth service and froze hiring for corporate roles in its retail business.

“There is obviously a lot happening in the macroeconomic environment,” Jassy said in the press release. “And we’ll balance our investments to be more streamlined without compromising our key long-term, strategic bets.”

Amazon CFO Brian Olsavsky said the company cut its capital expenditures budget for this year by a third after it spent heavily over the last two years on things like ramping its fulfillment and logistics network to meet pandemic-induced demand.

The company is now taking steps to “tighten our belt, including pausing hiring in certain businesses and winding down products and services where we believe our resources are better spent elsewhere,” Olsavsky said.

He added that the economic environment in Europe was worse in the quarter than in North America, because the “Ukraine war and the energy crisis issues have really compounded in that geography.”

Amazon’s gloomy forecast doesn’t bode well for the holiday shopping period. Analysts are already girding for a humdrum season, with online sales expected to grow just 2.5%, according to Adobe.

Amazon’s Prime Early Access Sale, held earlier this month, could help juice year-end sales. Data collected by third-party analysts signaled the event may have been lackluster, as shoppers feel the pressure of inflation. Jassy said in the release that customer response to the new discount event, and Prime Day, hosted in July, was “quite positive.”

Amazon is rounding out a disappointing earnings week for Big Tech. Alphabet and Facebook parent Meta both posted earnings that fell short of expectations as they navigate challenges in the digital ad market. Microsoft wasn’t immune, reporting softer-than-expected cloud revenue and weak quarterly guidance.

Apple, which also reported on Thursday, beat on earnings and revenue but came up short in core product categories including the iPhone business and the services unit. The stock is trading lower after hours.

Operating income at Amazon fell by almost half from a year earlier to $2.53 billion from $4.85 billion. Amazon Web Services accounted for all of the company’s profit, plus some, as the cloud unit generated operating income of $5.4 billion. Still, AWS posted the slowest revenue growth since 2014, when Amazon began breaking out results for the unit.

Amazon’s advertising business was one bright spot in the results, bucking the trend of its digital ad peers Facebook, Google and Snap, whose ads businesses have gotten whacked due to the economic environment and Apple’s iOS privacy changes last year. Ad revenue surged 25% year over year to $9.55 billion during the quarter, which handily topped analysts’ estimates of $9.48 billion.

Analysts have taken different approaches to their per-share earnings estimates because of Amazon’s hefty investment in electric-vehicle maker Rivian, which went public late last year. Amazon reported net income of $2.9 billion in the third quarter, which includes a gain of $1.1 billion in non-operating income from its Rivian stake. In the prior two quarters, the Rivian investment resulted in total markdowns of $11.5 billion.

https://www.cnbc.com/2022/10/27/amazon-amzn-earnings-q3-2022.html


....


Free shipping was arguably the biggest advantage amazon enjoyed over other internet retailers.

With the advent of rising fossil fuel and shipping costs, amazon's free shipping deal with USPS appears to be decoupling. Many items which amazon previously sold with free shipping now have surcharges added to cover higher shipping costs. More restrictions have been imposed on items. With amazon's free shipping being on a decline, its advantages over retailers like walmart and local mom and pop stores are diminishing.

So it seems that some are getting the free markets they wanted through amazons free shipping deal decoupling from its original agreed upon terms. Amazon stock is dropping.

Could amazon's decline be the incentive it needs to adopt crypto support as a payment option. I think most would expect amazon to scramble to find ways to close the gaps in its revenue streams. With many CEOs in the world being paid $10,000 an hour wages, certainly that comes with job performance expectations.

Or perhaps amazon will lie down and take their loss of profit in a graceful and stoic manner. Crazier things have happened lately.

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November 03, 2022, 03:47:20 AM
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It’s not only the free shipping why they get less sales. It’s because people have less disposable income compared to a year or two ago.

Most of the stuff that Amazon sells people don’t really need. I doubt many are buying laundry detergent or toilet paper from Amazon.  Its usually goods that people will put off buying when they got a higher mortgage payment and higher grocery bills.

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November 03, 2022, 04:07:12 AM
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Okay thanks to Eth going pos amazon’s

 gpu
psu
 pc
motherboard
pc cases all dropped

The loss of 20 million a day gross income created by eth mining is felt many times over due to the churning effect of that cash.

That 20 million
  goes to power companies
goes to gpu builders
goes to motherboard builders
goes to cpu builders.

I estimate that the 20 million in mining income churned at least 10 x every day

so 200 million a day flowing throughout the tech industry was killed off not 20 million.

so mr vb is responsible for fucking
amazon
newegg
alibaba
nvidia
amd
intel
asrock
msi
sapphire
evga
asus
biostar
seasonic
corsair

and all those above dropped sales. so the workers for those company are missing bonuses which means they do not go to a restaurant or take the family to the movies.

I wish I was exaggerating the economic damge the pos mr vb did by going pos.

I am sure he does not give a shit but have not heard from him be fun to see him on the run when they have to actually pay out some interest in 2023 or will it be 2024 or will it be 2025.

Yeah this mess will take a few years to settle.

First step will be when the fed stops the rates going up up and away.

we are at 4 and predicted to add .50 and .50 brings us to 5.00 say we are there at feb 2.

rates drop and we recover or not should be fun to see what happens.

oh post 40k nice.

3) Never invest more than you can afford to lose
2)Not your keys not your coins.
1) be like JJG just DCA
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November 03, 2022, 04:22:33 AM
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 #4

With the advent of rising fossil fuel and shipping costs, amazon's free shipping deal with USPS appears to be decoupling. Many items which amazon previously sold with free shipping now have surcharges added to cover higher shipping costs.
Yep, and I've seen that with other retailers as well--and it sucks, because I have a feeling that that surcharge being added in some cases is above and beyond what's needed to cover the USPS's recent increase in postage.  A small flat rate priority mail box was something like $8.70 last year, then it went up to $9.45, and just a few weeks ago they boosted it again to $10.40.  Crazy.  But I think they're only supposed to raise rates to track inflation, not because of increased fuel costs.  Aren't their vehicles pretty green right now?  And Amazon has its own drivers for a lot of things.

Not surprising Amazon's stock took such a big hit based on an earnings forecast--the entire market is and has been overvalued for years, and I think Amazon is particularly sensitive to bad news.  But that phrase "macroeconomic headwinds" is so overused that it's practically meaningless at this point.

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November 03, 2022, 08:12:29 AM
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Free shipping was arguably the biggest advantage amazon enjoyed over other internet retailers.

With the advent of rising fossil fuel and shipping costs, amazon's free shipping deal with USPS appears to be decoupling. Many items which amazon previously sold with free shipping now have surcharges added to cover higher shipping costs. More restrictions have been imposed on items. With amazon's free shipping being on a decline, its advantages over retailers like walmart and local mom and pop stores are diminishing.

So it seems that some are getting the free markets they wanted through amazons free shipping deal decoupling from its original agreed upon terms. Amazon stock is dropping.

It is quit troubling to see that every actions and inaction of government and most companies affects the common man mostly. Shell just publish a sound third quarter earnings of $9.5 billion. This means they a reaping from the high cost of fuel while the people bear the pain. Amazon's free shipping option was really assisting some individuals and businesses, now they have lost the opportunity. Amazon is one of the biggest employer of labor globally, but the sinking of its stock may lead to massive staff downsizing.  

Just recently Joe Biden threatened to impose special taxes on oil firms because of the massive profit they are making, if they don't consider reducing the price of fuel. Yes, the Russia-Ukraine crisis is affecting the oil market, but these oil firms are doing more harm than good because of greed.  


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