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Amazon shares collapsed on Friday after the e-commerce monolith reported worse-than-expected earnings fueled by high inflation and lingering supply chain constraints, pushing the stock down more than 30% below its target. record and extending a list of massive losses among previously high-flyers. technology firms.
Amazon shares have plunged more than 30% from an all-time high set last year.
The Washington Post via Getty Images
key facts
Amazon shares fell as much as 12.5% on Friday morning to $2,535, putting the stock on track for its worst day since January 2014 and ending about $184 billion in market value.
Fueling losses, the Seattle-based giant on Wednesday reported an unexpected loss of $3.8 billion in the first quarter, or $7.38 per share, significantly worse than the $8.36 per share earnings analysts had expected and far less than the $8.1 billion profit a year earlier.
In a statement, CEO Andy Jassy attributed the losses to continued inflationary and supply chain pressures, as well as “unusual growth and challenges” around the pandemic and the subsequent war in Ukraine, saying the company is “completely focused” on improving productivity and costs. efficiencies.
In a Friday morning note, Morningstar analyst Dan Romanoff lowered his price target for Amazon shares to $3,850 from $4,100, saying the company’s operating margin was a concern as inflation, excess Construction work and excess capacity killed revenue, and he warned that profitability challenges “will remain for a couple of quarters and maybe into next year.”
“When you’re one of the world’s largest retailers, adverse macroeconomic conditions and a turbulent political landscape inevitably take their toll,” CCS Insight analyst Marina Koytcheva said in emailed comments, agreeing that trouble for the company could spread. next year despite Amazon’s resilience. Web Services Business, which grew 37% in the first quarter.
Despite remaining bullish on the stock, analysts at Bank of America also lowered their Amazon price target on Friday to $3,770, acknowledging that cost pressures worth $4 billion in the first quarter will continue into the coming quarters. months, but saying they should be “manageable. with freight costs already from to fall and the company’s ability to limit new hires this year.
big number
$153 billion. That’s what Amazon founder and chairman Jeff Bezos is worth, according to Forbes. His fortune plummeted by more than $17 billion during Friday’s stock slump.
Tangent
Certainly, Amazon is not alone in posting staggering losses this week. Shares of Tesla plunged 12% on Tuesday, pushing the company’s market capitalization down by more than $125 billion. “Fears of slowing growth, higher interest rates, uncertainty over supply chains and geopolitical events have weighed on the broader market, but technology has taken the brunt of the pain,” the strategist wrote. Ally Invest, Lindsey Bell, in a note on Friday, adding: “It’s been an ugly month for the tech sector.” Down 11% in April, the tech-heavy Nasdaq is on track for its worst month since October 2008.
chief critic
“Amazon is well-equipped to withstand cost pressure more efficiently than most of its peers,” Bank of America’s Justin Post said on Friday, adding: “The retail industry will eventually pass higher costs on to consumers.” . Post also touted a “great bunch of earnings” from Amazon Web Services and reiterated a buy rating on the stock.
Other readings
Amazon Loses $3.8 Billion in Profit, But Andy Jassy Isn’t Worried (Forbes)
Bear Market Looms as ‘Relentless Selling’ Hits Stocks: Not Even Lower Inflation Can Help Now (Forbes)
Reference-www.forbes.com