© Stocksak. FILE PHOTO. The Amazon logo is visible outside its JFK8 distribution facility in Staten Island, New York. U.S. November 25, 2020. REUTERS/Brendan McDermid/File Photo
(Stocksak:) Amazon.com Inc (NASDAQ) shares fell as much as 21% on Thursday after it forecast that costs might eviscerate its profit in the current quarter. This is because early holiday marketing does not help to boost sales growth, and labor and delivery costs continue to rise.
This news came after a similar slide in META Platform shares on Wednesday, when Facebook (NASDAQ:), parent, reported late Wednesday that it had made costly metaverse bets as well as the impact of soaring inflation and ad spending. Investors were concerned. Apple (NASDAQ) earnings on Thursday were bright, with higher-than-expected revenue leaving its shares slightly lower.
According to IBES data from Refinitiv, Amazon’s net sales in the third quarter ended September 30 were $127.1 billion. This was lower than analysts’ expectations of $127.46 trillion. The net sales for the holiday quarter were predicted by Amazon to be between $140 billion-$148 billion, compared to expectations of $155.15 trillion.
MICHAEL O’ROURKE, CHIEF MARKET STRATEGIST, JONESTRADING, STAMFORD, CONNECTICUT
“A lot of people have been holding out that earnings would hold up here. Amazon’s guidance is disappointing as the fourth quarter is their Christmas period. They spoke of struggling in July when they reported Q2, but the stock rose 30, 40%. Evidently, there are still problems.
“As far as Apple, the numbers weren’t great; they weren’t terrible. I think everyone wants to know the guidance for the next quarter.
From a markets perspective, you have to be cautious going forward. Whether it’s Tesla (NASDAQ ) or the FANGs, they are the largest stocks on the market. We haven’t seen much good from any of them. Hopes of pivotal central banks policy are a lot of the reason the broad tape is still up.
“Obviously these companies are showing that the interest rate hikes and policy tightening are having an effect. It’s not clear how much, but it is noticeable. And I believe you’ll see investors at year end trying to take a step back. They need to establish a new baseline for where the trend is going in business. I expect more volatility at year’s end.
RICK MECKLER, PARTNER, CHERRY LANE INVESTMENTS, A FAMILY INVESTMENT OFFICE, NEW VERNON, NEW JERSEY“Big tech companies are not impervious to slowdowns in the economy, particularly if they are consumer driven. In the past, tech grew faster in periods of growth and had multiples that reflected this. But as the Fed embarks on this planned slowdown, it is eating away at some of their consumer-faced businesses and given their high multiples it is causing big contractions in their stock prices.”
QUINCY KROSBY CHIEF GLOBAL STRATEGIST LPL FINANCIAL, CHARLOTTE NORTH CAROLINA
“We were so used to tech outperforming during the pandemic. There was always concern when it came to earnings, but quarter after quarter they surprised everyone. This has been a major shift in tech. The higher rates don’t help and the stronger dollar acts as a headwind in a backdrop of weaker consumer demand. This is a difficult time.”
KIM FORREST CHIEF INNVESTMENT OFFICER, BOKEH PARTNERS, PITTSBURGH
“The world has changed, but the people haven’t.” They want to repeat what happened last year.
“Amazon results just reflect the changing tastes of the consumer which nobody should be surprised by it. We’ve been locked up in our homes for over two years, and now we’re free.”
“The companies and investors thought this would go on forever so the big technology companies like Amazon continued hiring to support a business that looks like the year 2021, and it’s not 2021. It’s 2022. Add inflation to the mix. I would guess that people are buying less stuff. We know that Amazon has less stock.
“The big part with Apple is what they think looking forward. Despite the fact that they have to fight inflation and the strong dollar being a headwind, the results are still quite positive.”
“Intel (NASDAQ:) results surprised on the upside. They were expected to be sold at a going out-of-business price, but they aren’t. There is still a lot of work ahead, but this quarter was a positive one. We still have commentary from the call so don’t get too excited.