More than £100billion was wiped off the value of Amazon last night as customers cut back spending in light of a cost of living crisis.
After another update that rocked Big Tech in the US, shares in the online giant fell 10 per cent after it posted disappointing quarterly results.
The slump shaved £113billion off the value of the company – and saw the near-10 per cent stake held by founder Jeff Bezos (pictured with partner Lauren Sanchez) fall by more than £10billion.
By contrast, Apple saw its shares rise 4.5 per cent to $163.64 after it posted a record set of second-quarter results. The group reported revenues for its second quarter of £78billion, up 8.6 per cent year-on-year and higher than analyst predictions of around £75billion.
Profits for the period were £20billion, ahead of market expectations of £19billion. The sell-off at Amazon came after it said sales between April and June would be well below expectations.
The online retailer had been expected to report sales of £100billion over the three month period. But it last night warned revenues would come in between £93billion and £97billion.
In a further blow, income in the first three months of the year fell to £3billion, down from £7.1billion in the same period 12 months ago. The slide in profits came as the easing of Covid-19 restrictions dented demand for online shopping.
Amazon chief executive Andy Jassy said the “pandemic and subsequent war in Ukraine have brought unusual growth and challenges” for the firm. However, he said the firm is focused on improving productivity and cost efficiency now that it is no longer chasing physical or staffing capacity.
Jassy also highlighted the continued growth of Amazon Web Services, the company’s cloud computing business, which rose 37 per cent year-on-year for the first quarter. Amazon became the first major tech group to post a profit of more than £100billion in February.
Netflix shares tumbled 35 per cent in a single day last week after it revealed paying subscribers were leaving in their droves. And shares in Tesla tumbled this week after boss Elon Musk agreed a £35billion takeover of Twitter.
But in a much-needed bright spot, shares in Facebook owner Meta soared yesterday after results from the social media giant were better than feared. The stock jumped 17.5 per cent to $205.73 on Wall Street in one of its best days in years.
Fears over the health of the global economy intensified yesterday after an unexpected slump in output in the United States – leaving the world’s biggest economy close to recession. In a report casting gloom over the outlook worldwide, the Commerce Department said gross domestic product fell at an annualized rate of 1.4 per cent in the first quarter of the year.
That was the first dip in nearly two years and followed growth of 6.9 per cent in the final quarter of last year. It left the US on the brink of recession – two quarters of contraction in a row.
However, the Federal Reserve is still expected to raise interest rates by 0.5 percentage points next week as it battles to control inflation. Inflation in the US is at a 40-year high of 8.5 per cent and while trade was weak in the first quarter, domestic demand remained strong.