1 Stock You Should Think Twice About Buying

1 Stock You Should Think Twice About Buying

Posted On November 10, 2022 2:27 pm

E-commerce and tech giant Amazon.com, Inc. (AMZN) guided a slowdown in sales growth for the holiday season, making investors anxious. The company expects net sales between $140 billion and $148 billion for the year’s final quarter, below analysts’ expectations, representing a year-over-year improvement of as little as 2%.

“We are seeing signs all around that, again, people’s budgets are tight, inflation is still high, energy costs are an additional layer on top of that caused by other issues,” Amazon Chief Financial Officer Brian Olsavsky said. “We are preparing for what could be a slower growth period, like most companies,” he added.

AMZN’s shares plunged substantially following the gloomy forecast and are hovering around its 52-week low. The stock has slumped 46% year-to-date to the last trading session at $89.98, well below its 50-day and 200-day moving averages of $116.72 and $130.19, respectively.

AMZN Chart
Source: MarketClub

AMZN’s market cap recently slipped below $1 trillion.

AMZN has been trying to navigate the macroeconomic headwinds and hosted two cornerstone sales events in a year: Prime Day in July and the Prime Early Access Sale last month.

Despite registering significant sales in the summer event, the company missed the consensus revenue estimate for the third quarter. Its cloud division, Amazon Web Services, also witnessed sales below expectations.

In addition, a report suggests U.S. online holiday sales will rise this year at their slowest pace since at least 2015, as consumers bear the brunt of sky-high inflation and the Fed’s rate hikes. High inflation and declining consumer sentiments are expected to keep marring AMZN’s growth.

The troubling macroeconomic tides have compelled the e-retailer to control costs across its businesses. The company has slowed warehouse openings and has put a hold on hiring.

Here’s what could influence AMZN’s performance in the upcoming months:

Deteriorating Bottom Line

For the fiscal third quarter ended September 2022, AMZN’s total net sales increased 14.7% year-over-year to $127.10 billion. However…

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