The package deal that made Amazon go away the trillion membership
In the wake of the macroeconomic scenario and sales and projections below expectations, the market value of the American giant dropped below US$ 1 trillion for the first time since April 2020.
Amazon is no longer a trillion dollar company. The American giant left the select club of companies valued at more than $ 1 trillion on Tuesday, November 1, after a 5.9% drop in its shares traded on Nasdaq. With the retreat, the company closed the day with its market value at US$ 987 billion.
This was the first time that the company’s market value fell below this level since April 2020, when its shares devalued as part of the advance of the pandemic. This time, however, the reasons that made the share price of the company founded by Jeff Bezos to enter the descendant are other.
One of the reasons is related to the troubled moment of the American economy. The increase in inflation and interest rates, which reached record levels in the country, made investors rethink their positions. As a result, the technology sector as a whole began to suffer in the capital market.
Since the beginning of the year, Amazon shares have lost more than 43% on the Nasdaq. Among the technology giants, the drop is not greater than that of Meta. Mark Zuckerberg’s conglomerate lost nearly 72% of market value in the period as its market value plummeted to $252 billion. Apple and Microsoft suffered less: drops of 17% and 31%, respectively, in that range.
What also hinders Amazon is the company’s own performance. The fall in the value of the shares also finds justification in the disappointment of investors in the face of the company’s projections for the fourth quarter.
On October 27, when announcing its results for the third quarter of 2022, the company released a guidance revenue of up to $148 billion for the fourth quarter, down from the $155.1 billion expected by the market.
Between July and September, the company already fell slightly short of expectations, as it reported revenue of US$ 127.1 billion, compared to an estimate by analysts in the range of US$ 127.4 billion.
Not even holding two Prime Day dates, a two-day event in which Amazon offers discounts to consumers and records high sales figures, helped calm the market. Even because the results were also lower than expected.
In July, when it held its off-season Prime Day, the company said it sold a record 300 million items, but did not disclose how much it made. The expectation was that the October edition could register a greater volume, which did not happen. 100 million products were sold in the period.
Amazon’s justification for the troubled moment is in the macroeconomic scenario. In the release of the third quarter results, Andy Jassy, CEO of the company, said that “obviously a lot is happening in the macroeconomic environment”.
Finally, Jassy stressed that, given the current context, he would “balance the company’s investments “to be more simplified”, without compromising the company’s main long-term strategic bets.