It was a rough year for mega-cap tech stocks in general. However, Amazon had a tough year in 2022.
The e-stock tailers have had their worst year since the dot-com crash. The stock dropped 51% in 2022, the most significant drop since 2000 when it fell 80%. Only Tesla (down 68%) and Meta (down 66%) have had a worse year among the most valuable tech companies.
Amazon’s market capitalization has dropped to around $834 billion from $1.7 trillion at the start of the year. Last month, the company was kicked out of the trillion-dollar club.
Much of Amazon’s woes can be traced back to the economy and macroenvironment. Inflationary pressures and rising interest rates have steered investors away from growth and toward companies with high-profit margins, consistent cash flow, also high dividend yields.
However, Amazon shareholders have had other reasons to sell the stock.
The company is dealing with slowing sales as forecasts of a sustained post-Covid e-commerce boom failed to materialize. During the pandemic’s peak, consumers relied on online retailers such as Amazon for everything from toilet paper and face masks to patio furniture. This caused Amazon’s stock to rise.
Consumers gradually returned to shopping in stores also spending on travel and restaurants as the economy recovered, causing Amazon’s impressive revenue growth to fade. The situation only worsen at the start of this year, when the company was hit with higher costs due to inflation, the Ukraine war, and supply chain constraints.
Amazon CEO Andy Jassy, who will take over for founder Jeff Bezos in July 2021, admit that the company hire too many workers and overbuilt its warehouse network to meet pandemic-era demand. It has since postponed or abandoned plans to open new facilities, and its workforce shrank in the second quarter.