The world's second richest man Jeff Bezos lost billions of dollars as shares of Amazon plunged to levels unseen in more than two years in after-hours trading.
Amazon is the latest casualty of an earnings season that has seen the tanking of the value of some of technology's biggest players amid fears of an impending recession slicing through growth expectations.
Amazon's shares fell 19 percent on Thursday in after-hours trade after the e-commerce giant's bleak forecast for the holiday quarter ending December. It had sought for higher revenue by raising fees for its fast-shipping club Prime up to an annual 43 percent in Europe this quarter. Amazon imposed a fuel and inflation surcharge on some merchants, along with two major events for the first time ever – Prime Day in July and the Prime Early Access Sale in October.
Jeff Bezos' Massive Loss
The latest share dip is a massive loss for Jeff Bezos who has a fortune of $171 billion. Analysts say the Amazon founder could lose as much as $23 billion after the company's shares dived by up to 21 percent.
If the stock fall trend continues, Bezos' wealth could become the fifth-largest one-day decline in history, as per Bloomberg Billionaires Index. The Amazon boss is now down to $111 billion from the highs of $214 billion in 2021. His net worth fell to $58 billion in 2022 because of the wider technology stock slump that struck Amazon hard.
E-commerce Giant Struggles to Make Profits
The year 2022 has definitely been a tough year for businesses and firms across the world and it has been a struggle for the e-commerce giant as well. Amazon reported revenue of $127.1 billion in the third quarter, slightly less than what analysts had been expecting - $127.5 billion. Net income fell to $2.9 billion ($0.28 per share), down from 9% from one year ago. However, Amazon shares took a dive deep of more than 18% to less than $90 in after-hours trading after the announcement of the quarterly report. This pushed the stock to its lowest level since early 2020, and down nearly 50% for the year.
Amazon said sales of its Amazon Web Services (AWS) segment grew 28 percent in the quarter. Adam Crisafulli, an analyst of Vital Knowledge Media, said AWS is the heart of the company. He believes the weakness there will raise a giant red flag. Crisafulli said the segment has been driving the bulk of Amazon's stock gains during the COVID-19 pandemic.
Uncertain Economy Times
Andy Jassy, Amazon CEO, attributed the loss to current uncertain economic times. "It's clear that particularly during these uncertain economic times, customers appreciate Amazon's continued focus on value and convenience. We're also encouraged by the steady progress we're making on lowering costs in our stores fulfilment networks, and have a set of initiatives that we're methodically working through that we believe will yield stronger cost structure for the business moving forward."
Jassy outlined that a lot is happening in the macroeconomic environment. "We'll balance our investments to be more streamlined without compromising our key long term strategic bets." Amazon will not change its maniacal focus on the customer experience, and is ready to deliver a great experience for customers this holiday shopping season.
