Tech companies are no longer enjoying the bull run as they used to in the past. Recently, Amazon stock also experienced some intense selling, and as a result, the market cap of Amazon dipped below $1 trillion. As a result, Amazon has officially exited the trillion-dollar stock club.
During the Tuesday session, the stock of Amazon dropped by 5.9%, which is the 5th consecutive day of selling pressure. If we look at the historical performance of Amazon, it only saw these levels during April 2020, which shows the severity of the situation. In fact, the recent sell-off has also erased the bullish surge witnessed during the pandemic era.
Recently, Amazon announced the results for its 4th quarter and to say that investors were disappointed would be an understatement. According to Amazon, the revenue growth during the holiday season is expected to be in the 2%-8% range, which is far lower than the analyst's estimates.
Amazon Web Services, which is the cloud division of the company, also reported fewer sales than expected by the analysts. If we look around, it seems all the major tech companies, such as Google, Snap, and even YouTube, are facing some serious problems.
In just 2022 alone, Amazon stock has lost 42% of its value, and there are still at least 2 months left in the year. If things continue at this pace, Amazon is all set to close its worst year since the financial crisis of 2008 (-42% loss).
Experts believe that the slumping economy is at the heart of this problem faced by Amazon and other big tech companies. Furthermore, the rise in the interest rates and inflation in the USA is also compounding the problem. And to make things even worse, Amazon also expanded a little too fast during the pandemic and now has to scale back due to the slow demand.