Wednesday October 05, 2022

After a pandemic, Amazon’s growth continues its slowdown

Amazon made a lot of money in the first quarter 2022. Investors have become accustomed to Amazon’s rocket-like trajectory in the pandemic. However, they aren’t yet able to adjust to the fact that it isn’t accelerating as fast. Amazon’s stock fell by around 10 percent after-hours trading before stabilizing a bit. The problem was not that Amazon had underperformed in Q1, it was that Amazon projected a slower quarter than analysts expected. CNBC reports that analysts expected Amazon to post $125.5 billion in sales. Instead, CNBC says that the company expects sales to range from $116 billion to $121 trillion. Although this is not a major problem in the grand scheme of things, it highlights the communications problems that Amazon is currently facing. Investors see the company’s merely good growth as a sign that it is slowing down. The company experienced such rapid growth in the early stages of the pandemic. In his first letter to shareholders earlier in the month, Amazon CEO Andy Jassy stated that he had achieved the equivalent of three years’ predicted growth in just 15 months. Analysts are right to say that Amazon is experiencing a slowdown in sales. The company reported a 44% year-over-year increase in net sales for Q1 2020, and a mere 7 percent for Q1 2022. This is obviously a much lower number. Compound Capital Advisors claims that this quarter marked Amazon’s slowest ever Q1 growth. Amazon also reported its first quarterly loss since 2015. This was due to a $7.6 million loss on its investment into Rivian, an electric vehicle maker. Rivian’s stock has fallen by more than half in this year. Jassy states that Amazon is now focusing on “improving productivity, cost efficiencies throughout its fulfillment network.” He warns that “this may take some while.” Today, the company also announced that Prime Day will be held in July this year, after it was held in June last year. This will increase the earnings boost from Amazon’s invented holiday to the third quarter 2022. This year, Amazon is not the only company facing shareholder problems. Steve Matthews, Bloomberg’s CEO, points out that all FAANG companies are experiencing dips: It has been a terrible year for FAANG stocks. via @BW @markets $AAPL $AMZN $FB $GOOGL $NFLX– Steve Matthews (@SteveMatthews12) April 27, 2022

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