Why Amazon shares tumbled 8% today

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of e-commerce giant Amazon (NASDAQ: AMZN) ended Thursday down by 7.81%. The tumble follows another key internet company’s fourth-quarter earnings miss, during a market-wide sell-off. Amazon’s fourth-quarter earnings report is slated for release after Thursday’s closing bell rings.

So what

Blame Meta Platforms (NYSE: FB) — the company formerly known as Facebook — mostly. The world’s most prolific social network posted Q4 per-share earnings of $3.67 Wednesday evening, missing estimates of $3.84. Its revenue outlook for the quarter currently underway also came up short, with the company citing new competitive pressure and pricing challenges linked to policy changes with Apple‘s iOS mobile operating system.

Investors are (understandably) assuming Amazon is facing comparable headwinds.

Now what

Analysts expect Amazon to report earnings of between $3.58 and $3.88 per share, depending on the source, though those figures should be taken with a grain of salt. Amazon’s profitability is being dramatically reduced by investments in its own growth. The company would normally report income on the order of $6 per share, and earned anywhere between $10 and $15 per share in the throes of the pandemic; it’s difficult to meaningfully guess exactly how much money the company made as the world moves on from the COVID-19 contagion.

A more relevant measure of Amazon’s fourth-quarter success will be the company’s top line, which the analyst community collectively believes will be $137.6 billion, up 9.6% year over year.

Regardless, given today’s volatility and the sheer uncertainty as to the actual health of the internet’s top names, the smart move here is remaining on the sidelines if you’re not already holding the stock, or sticking with Amazon if you’re holding it for the long haul anyway. Short-term speculators stand to get burned. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Amazon shares tumbled 8% today appeared first on The Motley Fool Australia.

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James Brumley has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Amazon, Apple and Meta Platforms, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Amazon, Apple, and Meta Platforms, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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