Amazon Stock Drops 20% After Missing Revenue Expectations
Amazon (AMZN) stock dropped by 20% after it released its revenue and sales numbers. The data missed the market's expectations and showed that Amazon's cloud business has failed to hit its revenue target. Furthermore, the 4th quarter guidance for Amazon was also a rather disappointing one.
If we look at the actual data, its revenue of Amazon was $127.1 billion, while the expected revenue was $127.63. So in a sense, the actual revenue was around half a million short of the market expectations. But when it comes to high-growth tech companies such as Amazon, even a decline of this size is a big deal.
It seems that the decline in revenue can be traced back to the declining sales of Amazon Web Services, which earned $20.5 billion while the expected number was $21 billion.
Amazon Growth Hurt By Strong Dollar
For the 4th quarter, Amazon is expected to make around $140 - $144 billion, while the expectations were around $155 billion.
One of the reasons for this decline in revenue is the strong dollar which is also hurting many other US stocks. Furthermore, rising headwinds from interest rates, inflation, and recession are also hurting Amazon.
Looking ahead, the data from the holiday season and New Year could boost some of Amazon's revenue, but that still remains to be seen.
On the macroeconomic level, there's a lot of disturbance which is forcing Amazon to focus its investments on long-term and strategic goals.
And the Prime Day events, which were meant to boost the company's revenue, also failed to make a big difference. At least, the Amazon investors were hoping for something big, but that didn't materialise. Overall, members of Amazon Prime purchased 300+ million items, but we still have no revenue numbers from the event.
However, there's still a positive side to all of this... Amazon reported losses during the previous two quarters but still managed to earn a profit.