Amazon could lose $53bn of its market value after Q3 earnings

25 Oct 2019217 Views

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After Amazon’s latest earning reports, Jeff Bezos has lost around $6.9bn of his fortune, putting his title of world’s richest person at risk.

With many of the world’s biggest tech players reporting their Q3 earnings over the last few days, it has been a busy week.

Earlier in the week, Twitter disappointed shareholders, Tesla pleasantly surprised investors and now Amazon has shocked analysts by falling short of expectations. It’s expected that the e-commerce, media and web behemoth could lose $53bn of its market value after the company missed earnings forecasts, causing shares to drop by 9pc.

According to CNBC, analysts expected earnings per share in pre-market trading to come in at $4.62 in Q3 but, in reality, the figure was $4.23. If trading opens at the same level, Amazon’s market cap will fall from $880.3bn to $827.1bn.

Overall revenue at Amazon in Q3, which includes sales from the company’s Prime Day, was $70bn, above analyst expectations of $68.8bn. The company called Prime Day the biggest shopping event in history, surpassing sales made on any prior Black Friday and Cyber Monday combined.

The impact of free one-day shipping

By hitting the $70bn mark, revenue at the company grew by 24pc. In each of the last quarters, Amazon spent more than $800m to expand its free one-day delivery service to more regions.

The company plans to spend another $1.5bn on expanding free one-day delivery to more products and regions during the fourth quarter.

Amazon Web Services (AWS) saw a total revenue of $9bn in Q3, which is slightly less than the $9.1bn projected by analysts.

The company lowered revenue guidance for the next quarter, causing concern among investors. The fourth-quarter guidance set by Amazon is between $80bn and $86.5bn, below Wall Street’s estimation of $87.4bn, suggesting that the company may be expecting a relatively quiet holiday season.

Bezos to lose billions

The company’s CEO, Jeff Bezos, reportedly lost about $6.9bn following the publication of the company’s Q3 earnings report. According to the company’s most recent SEC filing, Bezos owns 57,610,359 shares of Amazon.

As the earnings were announced, Bezos commented on the initiative for free one-day delivery. “Customers love the transition of Prime from two days to one day – they’ve already ordered billions of items with free one-day delivery this year. It’s a big investment, and it’s the right long-term decision for customers.”

According to the Bloomberg Billionaires Index, if Amazon’s losses continue until market close this evening, Bezos will lose his title as the world’s richest person. The Amazon boss could be overtaken by Microsoft founder Bill Gates.

Kelly Earley is a journalist with Siliconrepublic.com

editorial@siliconrepublic.com