Retail stocks - GettyImages-1055438678

Why did Amazon stock crash today | Motley asshole 2022-04-29 16:31:43

Retail stocks - GettyImages-1055438678


What happened

Amazon.comshare price (AMZN -14.05%) It fell 14% on Friday, as concerns about the online retail giant’s slowing growth and rising costs prompted many investors to sell their shares.

So what

Amazon’s revenue rose 7% year over year to $116.4 billion in the first quarter. That’s down from the 9% growth in the last quarter of 2021 and a staggering 44% increase in the same period last year.

The pace of Amazon’s expansion has slowed as the economy reopens. The lifting of coronavirus-related restrictions in the United States and many other countries means that more people are shopping inside traditional retail stores again. E-Commerce Growth, in turn, has slowed. US online retail sales fell 3.3% year-over-year in March, according to the digital payments leader Master Card Credit Card.

A person is shopping inside a retail store.

People are returning to stores and shopping online less. Image source: Getty Images.

At the same time, inflation and supply chain disruptions are driving up Amazon’s costs. Amazon is increasing wages to attract and retain enough workers in a tight job market. Higher energy and freight prices also affect its profitability.

These challenges contributed to a 58% drop in Amazon’s operating income to $3.7 billion.

What now

Amazon’s growth is likely to slow further in the second quarter. Management expects revenue to increase 3% and 7% year-over-year to between $116 billion and $121 billion. In addition, the company warned investors that it could incur an operating loss of up to $1 billion, as it battles cost pressures.

However, there were bright spots in the Amazon report. Notably, Amazon Web Services continues to grow with an impressive segment. AWS’ revenue jumped 37% to $18.4 billion, while its operating profit rose 57% to $6.5 billion. The computing giant’s infrastructure should help support Amazon’s expansion in the long run, as companies shift more of their operations online in the coming years.