The worst year for Amazon share prices since the dot-com disaster is coming to an end. The e-retailer giant's stock has fallen 51% in 2022, which is the worst decrease since it fell 80% in 2000, according to a report by CNBC.
Huge tech businesses such as Tesla and Meta had a rough year as well. The EV maker was down by 68% and Meta decreased by 66%.
Amazon's Stock Loss
Amazon's market capitalization has decreased from $1.7 trillion at the beginning of the year to roughly $834 billion now.
CNBC attributes the current economic status as the driving factor for Amazon's stock loss. The news outlet notes that investors are shifting away from growth and toward businesses with high-profit margins, reliable cash flow, and good dividend returns as a result of skyrocketing inflation and interest rates.
Customers began to rely on internet merchants like Amazon at the height of the pandemic for items like face masks, toilet paper, and other basic necessities. As a result, Amazon's stock reached record highs and its sales soared.
However, this did not last long and post-Covid boom predictions were not met by the company.
Consumer expenditures on the travel and food industry increased as the economy slowly recovered, which in turn reduced Amazon's strong revenue growth.
CNBC said that other factors such as the raging Russia-Ukraine war, inflation, and supply chain restrictions at the beginning of this year, contributed to the reduction of Amazon's stock.
Post-Pandemic Situation
Amazon CEO Andy Jassy, who took over from founder Jeff Bezos in July 2021, stated that the business employed too many employees and overbuilt its warehouse network during the pandemic.
The company's workforce decreased in the second quarter, and it has since postponed or canceled plans to open new sites.
The new CEO has also started a thorough investigation of the costs of the business, leading to the termination of various programs and a hiring freeze for the entire corporate staff.
Amazon started making what are anticipated to be the biggest corporate job cutbacks in company history last month, with the goal of firing up to 10,000 workers.
Numerous analysts have lowered their projections for 2023, citing ongoing macro challenges, sustained slowness in online retail, and cloud computing.
In a note published on December 18 by Evercore ISI analyst Mark Mahaney, he revised his projections for Amazon's 2023 growth to 6% rather than 10%. He also reduced his prediction for annual revenue growth at Amazon Web Services from 26% to 20%.
But despite recession worries, Mahaney said that Amazon continues arguably to be the highest quality asset in terms of revenue and profit estimates.
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