Amazon Warns Of Slower Sales As Economy Weakens - Amazon Stock

Amazon Warns Of Slower Sales As Economy Weakens - Amazon Stock

Apple and Amazon have indicated that the worsening global economy is affecting their sales, adding to concerns about their prospective profitability.

Amazon shares fell more than 15% after the US share market closed after the company anticipated considerably lower holiday revenues than expected.

Apple shares also fell as the company warned of a decline in gaming and advertising demand.

Both mentioned growing living costs as a factor reducing consumer purchasing power.

"We're really hopeful about the Christmas, but we're realistic that there are a variety of variables impacting on people's pockets," Amazon's chief financial officer Brian Olsavsky said on a conference call with investors to discuss the results.

Amazon founder and chairman Jeff Bezos recently cautioned about alarming economic signs, warning on Twitter that it was time to "batten down the hatches."

Apple, often regarded as one of the most stable of the tech powerhouses, has not been spared.

"Winter of Discontent"

Apple said in its quarterly update on Thursday that sales increased by 8% to $90.1 billion in the three months to September versus the same period the previous year.

That was a quarterly milestone, though it was hampered by lower-than-expected iPhone sales and slowing growth in China.

However, Apple officials cautioned investors that they were experiencing weakness in digital marketing and gaming and that Mac sales would decrease sharply. They went on to say that a high dollar would hurt business.

"Apple's capability to sell high-priced products in the current market breaks all the norms," said Sophie Lund-Yates, Hargreaves Lansdown's lead stock analyst.

"The important merry Christmas season is a significant indicator for consumer sentiment, and there's a possibility Apple may drop some momentum year on year in regards to Christmas sales."

During the epidemic, both Apple and Amazon saw commercial growth as more activity migrated online.

However, sales have slowed dramatically in the last year as people return to doing more of their purchasing in person and adjust their purchasing patterns in reaction to increasing costs.

Amazon's worldwide revenues increased 15% year on year to $127.1 billion in the three months to September, while its foreign business declined. Growth in its profitable cloud services division has stalled.

While Amazon sales were high in July, they fell in August and September, particularly in Europe, according to Mr. Olsavsky, who blamed the decline on a "tougher recessionary climate."

Fuel prices are also rising, which will have an impact on profitability, he says.

"Amazon is in trouble, as is the rest of big tech," said Paolo Pescatore, an analyst at PP Foresight. "This will be a winter of discontent."

In recent financial reports, executives at big technology companies such as Microsoft, Google's parent company Alphabet, and Facebook have indicated difficulties.

Search Tags:

• Amazon Prime
• Amazon Stock
• Amazon Business