Amazon shares fall 7% on weak Q4 forecast

Amazon shares fell 7% on Friday, a day after the company forecast that sales in the holiday quarter would fall far short of expectations.

Amazon shares pared some losses from earlier Friday morning, when shares fell about 50% from their highs, taking a roughly $940.8 billion hit to Amazon’s value. Earlier in the day, the stock traded at its lowest level since April 2020.

The company said Thursday that revenue would be between $140 billion and $148 billion in the year-end quarter, well below consensus estimates of $155.15 billion, according to Refinitiv.

Third-quarter revenue came in at $127.1 billion, up 15% year-over-year but slightly short of Wall Street’s $127.46 billion estimate. Amazon’s cloud business reported revenue growth of 27.5% for the quarter, the slowest growth since 2014, when the company began publishing AWS results.

The results capped an incredible week of earnings for Big Tech, where Amazon, Alphabet, Meta and Microsoft all missed expectations for parts of their business, signaling how record inflation, rising interest rates and recession fears are shaking their businesses. Several companies have issued gloomy forecasts indicating that more trouble may lie ahead.

Some analysts on Friday cut their price targets on Amazon stock to reflect near-term concerns. Still, others said they remained confident in the retail giant’s long-term prospects.

“Overall, while all of AMZN’s business units are likely exposed to broader macro pressures, we do not view 3Q results or 4Q guidance as a change in outlook,” wrote Nicholas Jones of JMP Securities, who maintained his rating at outperformed the market for Amazon shares, but revised its price target down to $140 from $150.

“AMZN’s retail and cloud solutions remain compelling propositions in our view, and advertising continues to have a strong opportunity for growth beyond classifieds,” Jones wrote. “Accordingly, we see AMZN as a best-in-class internet business that can not only weather the macro storm, but also emerge poised to re-accelerate growth.”

Wolfe Research analyst Deepak Mathivanan wrote in a note that Amazon’s fourth-quarter guidance shows it is not immune to a challenging global macro environment.

“However, we believe the company is well-positioned to weather a volatile demand environment with minimal disruption to operations and potentially gain share from subscale players,” said Mathivanan, who maintained his outperform rating on Amazon’s stock, but cut its price target to $130 from $150.

WATCHING: Amazon misses earnings, shares tumble on weak Q4 guidance