After Alphabet (Google), Meta (Facebook) and Microsoft, it is Amazon’s turn to announce disappointing financial results. Hit by the global economic crisis, the Seattle giant saw its share price drop by 20% at the time of the announcement of ends at 12% after the financial markets close.
If its total sales increased by 15% over a year, its online sales increased by 7% “only” to reach $53.5 billion in three months. More than the results themselves, it is the general trend that investors have sanctioned.
Operating profit is of course back in the green for the first time this year, but it is much lower than last year in the same period: $2.5 billion against $4.9 billion in 2021.
Above all, analysts are concerned about the e-commerce activity, the company’s mainstay. In three months, Amazon has lost 2.5 billion worldwide and 400 million in the United States. The group can thank the AWS (business services) division, which saves the furniture by generating 5.4 billion dollars in operating profit.
At the same time, the cloud division, although growing by 27.5% in one year, shows its weakest growth since its creation. Furthermore, it is not as fast as competitors Google and Microsoft.
The crisis also affects Amazon
During his traditional call For investors, Amazon CEO Andy Jassy was not optimistic about the short- to medium-term outlook. “We are not sure how consumer spending will develop during the holiday season.he explains, but we are ready regardless of the situation.”
Amazon thus expects sales of between 140 and 148 billion dollars by the end of the year. Analysts, on the other hand, expected $155 billion last quarter. As for profits, they would reach $4 billion at best, zero points at worst.
To tip the odds on its side, Amazon will therefore address the costs. “We look at our cost structure and wonder how we can save money” explained Brian Osalvsky, CFO of the group.
Amazon is actually coming out of a period of massive investment needed to meet strong demand during the Covid period. The group has therefore invested in gigantic warehouses and employed several hundred million people around the world.
As the market slows down, Amazon will have to lower its costs. Especially since the company’s CFO is quite aware of the global economic situation. “We are preparing for a period of slower growth, like many other companies” he declared.
He doesn’t think so well. This week, all the tech giants announced disappointing financial results, and the most worrying situation was Meta. Apple is the only Big Four company that continues to grow. But until when? The company has just raised the prices of its products and services significantly. Not sure that this strategy in times of global economic crisis will pay off in the long run. Think differently.