Amazon.com Inc AMZN has attributed its disappointing revenue forecast to the ongoing Paris Olympics and the recent assassination attempt on former President Donald Trump.
What Happened: Amazon’s finance chief, Brian Olsavsky, cited the current news cycle as a major reason for the company’s projected decline in online shopping for the quarter ending in September, CNBC reported on Thursday.
The Paris Olympics and the lead-up to the U.S. presidential election in November are diverting consumer attention, Olsavsky said during a call with journalists following the second-quarter earnings report.
"Customers only have so much attention," Olsavsky said. "When high-profile things happen, or the assassination attempt a couple of weeks ago, you see that people shift their attention to news. It's more about distractions."
Amazon expects its third-quarter revenue to range between $154 billion and $158.5 billion, with the midpoint of $156.25 billion falling short of the $158.24 billion consensus estimate. This, combined with a second-quarter revenue miss, led to nearly 7% drop in Amazon’s shares during extended trading.
Economic challenges are also influencing consumer spending patterns, according to Amazon executives. CEO Andy Jassy noted that consumers are being cautious with their spending, opting for cheaper items.
Olsavsky added that consumers are “continuing to be cautious” and are more focused on buying everyday essentials, which could explain the revenue shortfall.
Why It Matters: Amazon’s second-quarter earnings report, released on Thursday, showed a 10% year-over-year increase in net sales to $148 billion, which missed the Street’s consensus estimate of $148.56 billion. The company’s third-quarter guidance and revenue miss led to a significant drop in its stock price.
Amazon has been facing other challenges as well. The U.S. Consumer Product Safety Commission recently ordered Amazon to recall over 400,000 hazardous products sold on its platform. The company has also been struggling to meet its sustainability goals, with only about 19,000 electric delivery vans deployed as of 2023, far from its target of 100,000 by 2030.
Despite these challenges, Amazon’s acquisition of One Medical and its efforts to expand its healthcare services have been seen as a potential growth opportunity.
Price Action: Amazon.com Inc.’s stock closed at $184.07 on Thursday, down 1.56% for the day. In after-hours trading, the stock declined by 6.88%. Year to date, Amazon’s stock has risen by 22.77%, according to data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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