The tech giant saw its shares fall more than 20% after it reported its Q3 earnings missing revenue and guidance.

The well-known tech giant Amazon saw its shares fall more than 20% in after-hours trading on Thursday. This was after the company reported its third-quarter earnings with revenue and guidance being weaker than expectations from market analysts.

The tech giant reported earnings of $0.28 a share, which in fact was better than the market expectation of $0.22. However, the revenue for the quarter totalled $127.1 billion against the expectation of $127.76 billion.

Amazon took the liberty to explain that the company’s net sales took a $5 billion adverse impact from YoY alterations in foreign exchange rates. Operating income also declined to $2.5 billion in the third quarter, compared to Q3 in 2021 where it totalled $4.9 billion.  

For many months Amazon has fought against the challenging macroeconomic waves, it hosted two cornerstone sales events in a year. Prime Day in July and the Prime Early Access Sale this month. For the summer event, the tech giant sold more products than ever before to its Prime loyalty shoppers, while pursuing revenue from extra charges on some merchants and higher Prime subscription fees.  

Furthermore, Andy Jassy, Amazon CEO, has stated “In the past four months, employees across our consumer businesses have worked relentlessly to put together compelling Prime Member Deal Events with our eighth annual Prime Day and the brand new Prime Early Access Sale in early October. The customer response to both events was quite positive, and it's clear that particularly during these uncertain economic times, customers appreciate Amazon's continued focus on value and convenience”.

The CEO continued further in his interview and added that given the current macroeconomic environment, Amazon will be stabilising the business investments in order to be more ‘streamlined’.  

In addition, on average, European consumers have spent less than Americans as the war in Ukraine and higher fuel costs continue to weigh on the economies. Chief Financial Officer Brian Olsavsky said that the was in Ukraine and higher fuel prices also weighed on the business as expenses rose, but he said the company will question costs elsewhere and proceed carefully on hiring.

The firm sees fourth-quarter revenue between $140 billion and $148 billion against the analyst's estimates of $155.1 billion. This anticipates a negative impact of about 460 basis points due to the foreign exchange rates. The firm also sees operating income between $0 and $4 billion.

(Sources: investing.com, reuters.com, CNBC.com)