Amazon (NASDAQ:AMZN) the stock is trending on social media and tumbled in early trading today after the e-commerce giant disappointed Wall Street with a lackluster fourth-quarter outlook. As of this writing, the stock is down about 10%.
The news saw Amazon’s market cap drop below $1 trillion for the first time since the pandemic began. In fact, AMZN stock retained the Nasdaq this morning, although the stock market is now in the green today.
Here’s what investors need to know about Amazon’s future.
AMZN stock and low guidance
Why all the disappointment with AMZN stock? In a recent release, the company predicted its fourth-quarter operating profit would be between $0 billion and $4 billion. Additionally, Amazon estimates its revenue will be between $140 billion and $148 billion, which is significantly lower than the average outlook of $155 billion.
“As macroeconomic uncertainties continue, we have seen an increase in the number of AWS customers focused on cost control,” Amazon Chief Financial Officer Brian Olsavsky said during the company’s third-quarter earnings call. . The executive noted that higher programming and marketing costs for Prime Video also weighed on Amazon’s third-quarter operating profit. Olsavsky continued:
“The continued impacts of large-scale inflation, rising fuel prices and rising energy costs have impacted our sales growth as consumers assess their purchasing power and organizations of all sizes are evaluating their spending on technology and advertising.”
The CFO added that Amazon expects these trends to continue in the fourth quarter.
Some analysts remain bullish on Amazon
Despite forecasts dragging AMZN shares down, Goldman Sachs is still optimistic about the company’s long-term prospects. The company believes that Amazon’s e-commerce margins can increase. Margins will also be boosted by continued strong revenue gains from its cloud and advertising businesses.
Morgan Stanley also remains optimistic. The company expects Amazon to benefit from market share gains and cost reductions in the future. Analyst Brian Nowak lowered his price target on AMZN to $140 but maintained an “overweight” rating on the stock.
As of the date of publication, Larry Ramer has not held (directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.