Amazon Shares Plummet As Muted Q3 Results Fail To Quell Wall Street Wariness Of Tech Stocks

Amazon shares plunged more than 20% after hours after shedding 4% during the regular trading day after the company became the latest tech giant to stumble in the third quarter.

In the period ending September 30, revenue rose 15% to $127.1 billion, while earnings came in at 28 cents per share on a diluted basis. The profit number exceeded Wall Street analysts’ consensus estimate, but the revenue line fell slightly below expectations. Results in the Amazon Web Services division also fell short, mainly a 27% year-over-year revenue gain to $20.5 billion.

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Shares in Amazon, which had a 20-for-1 split several months ago after a long runup, plunged more than 20% after hours, dipping below $90 after finishing Thursday’s main session at $110.96. It was hard to pinpoint one particular reason for the rush to the sidelines by the investors, but Amazon joined Google parent Alphabet as well as Meta Platforms, Microsoft and other tech names getting battered amid a cyclical downturn.

Volatility was noticeably worse outside the U.S. than in Amazon’s home country. Total operating profit fell nearly in half to $2.5 billion, compared with $4.9 billion in the year-ago quarter. Operating losses in the international unit widened to $2.5 billion from $900 million a year ago, due to a host of issues like foreign currency fluctuations, energy price surges, inflation, supply chain issues and the war in the Ukraine. Revenue in the international segment dropped 5% to $27.7 billion, but without foreign exchange rate changes it went up 12%.

Company veteran Andy Jassy took over last summer as Amazon’s CEO, replacing founder Jeff Bezos, who has remained executive chairman. It hasn’t been smooth sailing for the new top exec. In the company’s earnings release, Jassy called out “compelling” results from recent e-commerce events created for Prime members, though multiple reports in the business and tech press have indicated that this month’s Prime Early Access Sale was not a major boost to sales.

“We’re also encouraged by the steady progress we’re making on lowering costs in our stores fulfillment network, and have a set of initiatives that we’re methodically working through that we believe will yield a stronger cost structure for the business moving forward,” Jassy said. “There is obviously a lot happening in the macroeconomic environment, and we’ll balance our investments to be more streamlined without compromising our key long-term, strategic bets.”

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