Amazon loses $130B as latest earnings fall short
The bigger they are, the harder they fall.
Amazoncom.’s shares plummeted as much as 8.1% Friday after the retail giant reported sales below analyst estimates for the first time since 2018.
That pared more than $130 billion from the company’s market capitalization, a figure that, if it were for a single company, would be larger than the market cap of 435 other members of the S&P 500 Index.
The loss is about the equivalent of the entire market value of Target Corp.
David Spika, president of GuideStone Capital Management, which has about $18 billion in assets under management, attributed the decline to expectations put on the company as it saw revenues spike as consumers turned to online shopping during the pandemic and is indicative of expectations for earnings growth for the broader market becoming unrealistic.
“This rapid growth in earnings is already priced in and expectations are so high,” Spika said.
“It’s all based on the fact that it didn’t exceed ridiculously lofty expectations. And that’s something I think people need to keep an eye on because expectations are very, very high today.”
In other Amazon news on Friday, the e-commerce titan faces the biggest ever European Union privacy fine after its lead privacy watchdog hit it with a $888 million penalty for violating the bloc’s tough data protection rules.
CNPD, the Luxembourg data protection authority slapped Amazon with the record fine in a July 16 decision that accused the online retailer of processing personal data in violation of the EU’s General Data Protection Regulation, or GDPR.
Amazon disclosed the findings in a regulatory filing on Friday, saying the decision is “without merit.”
“There has been no data breach, and no customer data has been exposed to any third party,” Amazon said in a statement, adding that it plans to appeal.
“These facts are undisputed. We strongly disagree with the CNPD’s ruling.”
The decision concludes a probe started by a 2018 complaint from French privacy rights group La Quadrature du Net.
It cautiously welcomed the decision.