Amazon’s second-quarter earnings report released on Thursday fell short of expectations, causing the company’s share price to plummet by 12% on Friday.
Despite a 10% increase in revenue to $147.98 billion, the e-commerce giant’s sales growth was slower than anticipated. Net income, however, doubled to $1.26 per share, surpassing estimates of $1.03 per share.
The company attributed the disappointing sales to a chaotic news cycle, which distracted consumers and led to softer-than-expected sales. Additionally, consumers continued to “trade down” to lower-ticket items, such as everyday essentials and consumables.
On a positive note, Amazon’s cloud computing segment, Amazon Web Services (AWS), showed continued strength, with revenue reaching $26.3 billion. Analysts were encouraged by this growth, citing it as a key beneficiary of the shift towards cloud modernization.
Looking ahead, Amazon expects revenue of $154 billion to $158.5 billion for the third quarter, which falls short of consensus estimates.
The disappointing earnings report and subsequent share price drop raise concerns about Amazon’s ability to navigate a challenging economic environment. However, the company’s strong cloud computing segment and continued focus on cost-cutting measures provide some reassurance for investors.