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Amazon shares faced increased pressure during the market premarket on Friday after the company's forecast for sales for the current quarter to be much lower than expectations.
Amazon's stock has recently climbed to $95.62 in the premarket trade. This was 14% less than it's prior close and was echoed by the sell-off that occurred in trading after hours on Thursday.
The downturn follows disappointing performances from other tech giants, Alphabet, Meta Platforms and Microsoft. Regarding the stock market's performance, the “facing" or FAANG stocks are set for their worst year in history.
Amazon warns of a slowing in sales as the economic weakness slackens
APPLE AS WELL AS AMAZON REVENUES ARE GETTING HARMED DUE TO THE WEAKENING GLOBAL ECONOMY, TECH GIANTS HAVE BEEN WARNED, ADDING TO THE WORRIES ABOUT THEIR FUTURE EARNINGS.
Amazon shares fell over 15% following the US market shutdown after the company forecasted lower sales for the Christmas season than anticipated.
Apple shares also fell after warnings of slowing demand for advertising and gaming.
Both mentioned the increasing living price as the reason for reducing consumer purchasing power.
"We're extremely positive about the Christmas season. However, we're aware that there are a variety of things that are weighing on the wallets of people", the chief of financial services at Amazon, Brian Olsavsky, said to analysts during a phone telephone call discussing the company's results.
Amazon CEO Jeff Bezos, who remains chairman of the company, was recently warned about the alarming signals from the economic sector in a post via Twitter, saying it's the right time to "batten down the hatches".
Apple, considered one of the strongest tech giants, has not been unaffected.
"WINTER OF DISCONTENT"
In its report released on Thursday, Apple said that revenues increased by 8 per cent to $90.1bn during the three months from September, compared to the same timeframe in the year prior.
This was a record for the quarter, but it was marred by lower-than-expected iPhone sales and a slowing expansion in China.
However, Apple executives advised investors that they could see weaknesses in digital advertising and gaming, expecting a significant drop in Mac laptop sales. They warned that a strong dollar could hurt business.
"Apple's ability to sell high-priced hardware in this market exceeds the norm," said Sophie Lund-Yates, the lead equity analyst for Hargreaves Lansdown.
"The crucial holiday season is an important gauge for consumer mood and it's possible that Apple is likely to fall off a bit year-over-year in the festive sales."
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Both Apple and Amazon experienced a surge in sales in the midst of the pandemic as more activity came online.
However, sales have slowed significantly in the last year since consumers have begun shopping in person again and changed their purchasing habits in response to increasing prices.
At Amazon, its overall sales from September to October were up 15% from the previous year to $127.1bn; however, its international business slowed. The company's growth slowed down in its profitable cloud services division.
Although Amazon sales were up during July, they declined during August and September, especially in Europe, according to Mr Olsavsky, attributing the issues to the "tougher economic environment".
Costs for products like fuel are also increasing and could impact profits, he noted.
"Worrying time for Amazon is as with other large technology," said Paolo Pescatore, Analyst at PP Foresight. "This is expected to be a season of unrest."
The top executives of major tech companies, which include Microsoft, Google, Alphabet, and Google's parent firm Alphabet, Facebook, have also spoken about weaknesses in their recent financial statements.
