Amazon shares fell 14%, the worst day in 17 years

Andy Jesse, CEO of Amazon.Com Inc., during the GeekWire Summit in Seattle, Washington, USA, on Tuesday, October 5, 2021.

David Ryder | Bloomberg | Getty Images

Shares of Amazon fell 14% on Friday after the company gave a revenue forecast for the current quarter that is not in line with Wall Street estimates. This could be the worst day for Amazon since February 2005, when losses remain until closing.

Amazon said on Thursday it forecast revenue of $ 116 billion to $ 121 billion in the second quarter, behind analysts’ average estimates of $ 125.5 billion, according to Refinitiv.

Amazon’s main retail business has stalled as the flurry of online shopping is dwindling amid a post-pandemic economic recovery. The company’s operating costs are growing faster than its sales. Amazon has invested heavily in staffing its warehouses and tackling supply chain problems, and now it is facing rising inflation as well as rising transportation and labor costs.

The forecast for the second quarter predicts that revenue growth could fall to a range of 3% to 7% from a year earlier, meaning a further slowdown from the first quarter when Amazon’s revenue grew 7%.

Amazon also lost about $ 3.8 billion in the first quarter compared to revenue of $ 8.1 billion a year ago. The company’s investment in electric car maker Rivian has affected its profits.

“While sales did not live up to expectations of just $ 6 million, the biggest headline was the company’s first quarterly loss since 2015, a loss of $ 7.56 per share, or nearly $ 16.00 than expected earnings per share.” – said analysts at William Blair. , which have the best rating on Amazon shares, in a note for customers on Thursday. “Under the hood, the company reported pre-tax losses of $ 8 billion related to investments in Rivian Automotive. Recall that in the previous quarter, the company reported a profit of $ 12 billion related to investment. We estimate the company’s earnings per share excluding investments. the losses will be about $ 3.40, which is still 60% below the consensus as the company continues to face headwinds related to shipping, labor, overcapacity and difficult comparisons from the previous year. ”

Analysts such as Yousef Squali of Truist Securities still believe Amazon’s forecast will improve in the second half of the year. Squali said in a Friday note to customers that he expects Covid-related costs, along with labor and inflationary pressures, to decrease over the course of the year, while Amazon’s service network becomes more efficient as staffing problems normalize and supply chains.

“We need to see a significant improvement in fixed cost performance and efficiency in the second half of the 22nd year, starting with Prime Day in July and then in the seasonally strong 4th quarter of the 22nd year,” said Squally, who recommends buying Amazon shares.

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Amazon shares fell 14%, the worst day in 17 years

Source link Amazon shares fell 14%, the worst day in 17 years

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