Shares of Amazon collapsed Friday after the ecommerce monolith reported worse-than-expected earnings spurred by high inflation and lingering supply chain constraints, pushing the stock down more than 30% below its record high and extending a slate of massive losses among formerly high-flying technology firms.
Amazon stock tumbled as much as 12.5% Friday morning to $2,535, putting shares on track for their worst day since January 2014 and wiping out about $184 billion in market value.
Spurring the losses, the Seattle-based giant on Wednesday reported an unexpected loss of $3.8 billion in the first quarter, or $7.38 per share, significantly worse than the $8.36 per share profit analysts were expecting and much lower than the profit of $8.1 billion a year earlier.
In a statement, CEO Andy Jassy chalked up the losses to ongoing inflationary and supply chain pressures, as well as “unusual growth and challenges” around the pandemic and subsequent war in Ukraine, saying the firm is “squarely focused” on improving productivity and cost efficiency.
In a Friday morning note, Morningstar analyst Dan Romanoff lowered his price target for Amazon shares to $3,850 from $4,100, pointing out the firm’s operating margin was concerning, as inflation, excess labor and excess capacity ate away at income, and warning profitability challenges will ” linger for a couple of quarters and perhaps into next year.”
“When you are one of the largest retailers in the world, adverse macroeconomic conditions and turbulent political landscape will inevitably bite,” analyst Marina Koytcheva of CCS Insight said in emailed comments, agreeing that troubles for the firm could spill into next year despite a resilient Amazon Web Services business, which grew 37% in the first quarter.
Despite remaining bullish on the stock, Bank of America analysts also lowered their Amazon price target on Friday to $3,770, acknowledging that $4 billion worth of cost pressures in the first quarter will continue in the coming months, but saying they should be “manageable,” with freight costs already starting to fall and the company’s ability to limit new hiring this year.