Credit rating service Moody’s has taken its outlook for Amazon to “Negative” from “Stable.”
Moody’s vice president Charlie O’Shea said that the action was taken in response to Amazon’s disclosure Monday morning that it would be offering senior unsecured notes.
Following Moody’s release, Amazon shares were down more than 2.6%.
“The change in outlook to negative results from Amazon’s announcement this morning that it was issuing a sizeable, though amount to be determined, level of new senior unsecured notes,” O’Shea wrote.
“Proceeds are to be used for general corporate purposes in support of Amazon’s myriad growth initiatives, and it is Moody’s expectation that the funds will not be utilized for any form of shareholder returns.”
Moody’s reaffirmed its ‘Baa1’ senior unsecured rating for Amazon.
Following Amazon’s latest quarterly report, in which the company reported a quarter that saw the company miss on margins, revenue, and loss per share.
As Reuters reported after Amazon’s report, at least 20 Wall Street brokerages cut their price target on the company’s stock, which is down about 17% this year.
Back in October, Matthew Benkendorf, portfolio manager at Vontobel Asset Management, told Reuters that, “[Amazon is] becoming much too distracted in all these other efforts… They are their own worst enemy to success. They really need to do some soul searching and get focused.”
Greenlight Capital’s David Einhorn also disclosed in his third quarter letter to investors that he added Amazon as a short position in his “bubble basket.”
As Business Insider’s Julia La Roche reported, Einhorn wrote:
“We added to our exposure of ‘Bubble Basket’ shorts, AMZN’s recent disappointment is notable in that for years, the story has been that AMZN isn’t profitable because it is growing so fast. Now growth is slowing, but rather than unleashing higher profits, the slower growth is leading to even greater losses. One of the principal bullish assumptions supporting many bubble stocks is, ‘the company is growing too fast to be very profitable.’ We think AMZN is just one of many stocks for which this narrative will ultimately prove false.”
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.
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