Amazon braces for bleak winter as company loses $200 billion overnight

Amazon has said that it is anticipating a slowdown in growth for the upcoming holiday season in a move which wiped nearly 20 per cent off the company’s value.

The retail giant’s valuation dropped by over $200 billion – more than the entire value of companies such as The Walt Disney Company and Lockheed Martin – in after-hours trading on Thursday. Investors woke up on Friday to find the company at its lowest share price since the onset of the Covid-19 pandemic in March 2020.

Announcing its Q3 results, Amazon reported sales of $127.1 billion – $400 million lower than Wall Street estimates – and returned to growth after two consecutive quarters of loss, generating $2.9 billion in profits.

CEO Andy Jassy praised the success of Amazon’s Prime membership programme, and said that the company sold more items than ever before to Prime customers during a quarter which housed Prime Day in July and the Prime Early Access Sale in October.

He said: “The customer response to both events was quite positive, and it’s clear that particularly during these uncertain economic times, customers appreciate Amazon’s continued focus on value and convenience. There is obviously a lot happening in the macroeconomic environment, and we’ll balance our investments to be more streamlined without compromising our key long-term, strategic bets. What won’t change is our maniacal focus on the customer experience, and we feel confident that we’re ready to deliver a great experience for customers this holiday shopping season.”

What has spooked investors however is the company’s revised Q4 estimates, with Amazon expecting net sales of $140-148 billion. Analysts had predicted sales to stand at $155.15 billion.

Speaking on an earnings call, Amazon’s chief financial officer Brian Olsavsky explained the revised figures. He said: "We are seeing signs all around that, again, people's budgets are tight, inflation is still high, energy costs are an additional layer on top of that caused by other issues. We are preparing for what could be a slower growth period, like most companies."

The news comes during a slow period for BigTech firms, with Microsoft, Meta and Alphabet all reporting lower-than-expected results in recent weeks.

Even Amazon Web Services (AWS), one of the most stable areas of steady growth for Amazon, has not been immune from the economic hardships of the day. Its Q3 net sales grew by 28 per cent, down from 39 per cent growth 12 months prior.

Amazon has also slowed its warehouse openings and is hiring fewer new employees, while the company is also scaling back efforts to locally deliver packages via autonomous vehicles.

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