After Alphabet (Google), Meta (Facebook) and Microsoft, it’s 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 for end at 12% after the financial markets close.
If its overall sales increased by 15% over one year, its online sales are up 7% “only” to reach 53.5 billion dollars in three months. More than the results themselves, it is the general trend that investors have sanctioned.
Operating profit is back in the green for the first time this year, of course, but it is much lower than last year over the same period: 2.5 billion dollars against 4.9 billion in 2021.
Above all, analysts are worried about the e-commerce activity, the main foundation of the company. In three months, Amazon has lost 2.5 billion worldwide and 400 million in the United States. The group can thank the AWS branch (business services) 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. Moreover, it is not progressing as fast as that of competitors Google and Microsoft.
The crisis also affects Amazon
During his traditional call To investors, Amazon CEO Andy Jassy was not optimistic about the short to medium term outlook. “We’re not sure how consumer spending will evolve over the holiday season.he explains, but we are ready whatever the situation.”
Thus, Amazon expects sales of between $140 billion and $148 billion by the end of the year. Analysts, on the other hand, were counting on 155 billion dollars in the last quarter. As for profits, they would reach $4 billion at best, zero points at worst.
To put the odds on its side, Amazon will therefore tackle the costs. “We look at our cost structure and wonder how to save money” explained Brian Osalvsky, chief financial officer of the group.
Amazon is indeed coming out of a period of massive investments necessary to meet the strong demand of the Covid period. The group has therefore invested in gigantic warehouses and hired hundreds of millions of people around the world.
Since the market is slowing down, Amazon will have to lower its costs. Especially since the company’s financial director is rather lucid about the global economic situation. “We are preparing for a period of slower growth, like many other companies” did he declare.
He doesn’t believe so well. This week, all the tech giants announced disappointing financial results, the most worrying situation being that of Meta. Apple is the only Big Four company to continue to grow. But until when ? The company has just significantly increased the prices of its products and services. Not sure that in times of global economic crisis this strategy will pay off in the long term. Think different.