Amazon sees $148 billion in market value wiped out after sales outlook misses forecasts

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Amazon missed sales estimates in the second quarter. Tom Williams/Getty Images
  • Amazon fell as much as 8.1% in early trading, wiping $US148 ($AU200) billion off the company’s market value.
  • Investors were disappointed after revenues missed estimates and Amazon forecast lower-than-expected sales.
  • Yet Amazon’s profit still jumped 50% year-on-year, and its cloud computing division outperformed.
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Amazon lost $US148 ($AU200) billion of market value on Friday in early trading after the e-commerce giant forecast lower-than-expected sales in the third quarter and missed revenue estimates for the first time since 2018.

Shares in the company dropped as much as 8.1% on the Nasdaq exchange on Friday. That took Amazon’s market capitalization – the value of all its shares combined – to $US1.67 ($AU2) trillion, $US148 ($AU200) billion lower than at Thursday’s close.

Amazon then pared losses to stand 7.02% lower at $US3,351.86 ($AU4,537) by 10.13 a.m. ET. The drop helped drag down the Nasdaq 100 index by 0.5%.

The online retailer published second-quarter earnings after the bell on Thursday, showing that sales jumped 27% year-on-year to $US113 ($AU153) billion. But investors were left underwhelmed, as analysts had predicted a rise in sales to around $US115 ($AU156) billion.

The market was also disappointed by Amazon’s sales forecast for the third quarter, which came in below expectations. Amazon said operating profit would be between $US2.5 ($AU3) billion and $US6 ($AU8) billion, compared with $US6 ($AU8).2 billion in the third quarter of 2020.

Amazon’s lower-than-expected sales and forecasts were in large part down to people choosing to do less online shopping as the coronavirus pandemic eased, chief financial officer Brian Olsavsky told analysts. The retailer was one of the major beneficiaries in the outbreak of COVID-19, as people went online to buy essentials and gadgets while locked down at home.

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The second-quarter results were still astounding by most standards, but Amazon’s stock price has become a victim of the company’s success, said Nicholas Hyett, equity analyst at broker Hargreaves Lansdown.

“It’s saying something when you can report quarterly sales roughly equal to the annual GDP of Ukraine and 33% operating profit growth and still disappoint the market,” he said.

Amazon’s operating profit rose 33% year-on-year to $US7.7 ($AU10) billion in the second quarter. Its net profit jumped 50% to $US7.8 ($AU11) billion, beating expectations, as did revenues at the Amazon Web Services cloud division.