Amazon's Gloomy Year-End Shopping Season Outlook... Stock Plummets in After-Hours Trading

Q4 Revenue Forecast of $140 Billion to $148 Billion Falls Short of Expected $156 Billion
Regular Trading Drops 4%, After-Hours Trading Sees Additional Decline Close to 20%

[Image source=AP Yonhap News]

[Asia Economy Reporter Park Byung-hee] Amazon's stock is plummeting in after-hours trading on the New York Stock Exchange after releasing a gloomy sales forecast for the year-end shopping season.

According to Bloomberg on the 27th (local time), Amazon announced its third-quarter earnings after the NYSE closed, forecasting fourth-quarter sales to be between $140 billion and $148 billion. Bloomberg reported that this figure fell significantly short of the analysts' average estimate of $156 billion.

On the day, Amazon's stock price dropped 4.06% during regular trading hours and continued to fall in after-hours trading. As of 5:24 PM, the stock was down 13.79% compared to the regular session closing price. Earlier in after-hours trading, it had plunged nearly 20% but later reduced the loss somewhat.

Amazon's third-quarter revenue was $127.1 billion, a 15% increase compared to the same period last year. However, this also slightly missed analysts' expectations of $127.6 billion.

By business segment, Amazon Web Services (AWS), the core revenue source providing cloud services, recorded sales of $20.5 billion, a 27% increase. AWS revenue also fell short of analysts' forecast of $21 billion.

Online store sales increased by 7.1% to $53.5 billion.

Net profit for the third quarter was $2.9 billion, marking a return to profitability after two consecutive quarters of losses. Amazon recorded a net loss of $3.8 billion in the first quarter of this year, marking its first operating loss in seven years. It then posted a net loss of $2 billion in the second quarter.

Despite the recovery of daily life following the COVID-19 pandemic, Amazon is facing difficulties as e-commerce sales slow down. Although Amazon has undertaken cost-cutting measures, operating expenses in the third quarter rose to $125 billion, an increase of about 18% compared to the same period last year. The growth rate of operating expenses exceeded the revenue growth rate for five consecutive quarters.

Amazon's stock price has already fallen about 35% this year.