Amazon shares sank overnight as the online giant said they expected trading conditions to worsen through the rest of 2022 as inflationary pressures squeeze consumers.
Amazon was just one of many US tech companies this week blaming the economic environment for disappointing financial performance.
Meta, Alphabet, Microsoft and now Amazon are all concerned about how the financial health of their customers will impact growth through the winter.
Amazon shares were down over 12% in the premarket, despite sales rising 15% to $127.1 billion in the third quarter.
“Q3 results for Amazon disappointed largely across the board, with the biggest worry for investors likely coming from the guidance for the fourth quarter, traditionally the most important period of the year for e-commerce. Revenue expectations of $140-$148bn were well behind expectations and operating income’s a disappointment too, with a guide of $0-$4bn,” said Matt Britzman, Equity Analyst at Hargreaves Lansdown.
“The core e-commerce business has come under pressure from changing shopping habits from the boom seen over the pandemic and a consumer with less disposable income.”
Britzman attributed the slowdown at Amazon in part to their expansion plans, which he says has lifted costs.
“Clearly, Amazon went too big too soon on its expansion plans and it’s had to put the brakes on and then some to try and get costs back under control. Operating costs were up close to 18% in Q3, so those cost cutting actions haven’t made their way through as fast as we’d like to see, weighing heavily on the bottom line.”