Amazon Shares Plunge Following Q3 Result- Here’s Why

Amazon (NASDAQ: AMZN) shares tumbled as much as 20% premarket after reporting its earnings after the bell on Thursday, anticipating smaller-than-expected sales during the holiday season.

The tech giant becomes the latest firm to report disappointing earnings this week following Meta Platforms. Amazon has suffered from macroeconomic factors impacting costs, such as surging inflation and rising interest rates this year.

In the third quarter, net sales increased 15% to $127.1 billion, however, it came in slightly below analysts forecasts. In addition, the company reported a net income of $2.9 billion and earnings per share of $0.28. In the previous two quarters, the company reported a net loss.

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Amazon CEO Andy Jassy said the firm was “encouraged by the steady progress we’re making on lowering costs in our stores fulfillment network, and have a set of initiatives that we’re methodically working through that we believe will yield a stronger cost structure for the business moving forward.”

However, investors were alarmed by the company’s guidance, which projected Q4 net sales of between $140 billion and $148 billion. This came below the $155.15 billion projected over the crucial holiday shopping season.

Jassy commented on the challenging environment, adding, “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.”

The forecast also accounts for a negative impact from currency exchange rates of roughly 460 basis points. Furthermore, operating income, which was $3.5 billion in the fourth quarter of 2021, is anticipated to range between $0 and $4 billion in Q4 2022.

Amazon shares are currently down over 12% premarket, while they have declined more than 30% this year.