To The Moon

Due to weak Q3 earning and poor Q4 guidance, US stock market third largest company , $Amazon.com(AMZN)$ has plunged more than 20% in post trading of October 27th, which was quite similar to META,  and ended up with 10%.

This means the fourth big-tech down.

Q3's performance is mixed.

• Revenue was US $127.1 billion, a year-on-year increase of 14.7%, slightly lower than the expected US $127.6 billion;
• Among them, physical store revenue was 4.69 billion US dollars, a year-on-year increase of 10%, slightly higher than the expected 4.67 billion US dollars; The revenue of the three-party online store was 28.67 billion US dollars, slightly higher than the expected 28.49 billion US dollars; AWS cloud business revenue was US $20.54 billion, a year-on-year increase of 27%, which was lower than the expected US $21.01 billion. If the exchange rate impact was deducted, the year-on-year growth rate was 28%, and the AWS revenue growth rate in the second quarter was 33%; At the same time, the revenue of advertising service was $9.55 billion, higher than the expected $9.48 billion.
• Gross profit margin was US $56.8 billion, up 19% year-on-year, which was higher than expected. However, due to the high growth rate of R&D and administrative expenses, earnings before interest and tax still fell by 48%, only US $2.5 billion, lower than the expected US $3.1 billion.

Because Amazon's financial reports in previous quarters, its $Rivian Automotive, Inc.(RIVN)$ has changed its income statement, so its profit vlitile. Rivian's loss has affected its profit by 1.1 billion US dollars this quarter.

At the same time, AMZN lowered its guidance for the fourth quarter.Revenue is between $140 billion and $148 billion, with a year-on-year increase of only 2% to 8%Is the lowest in recent years. Previously, the market unanimously expected it to be $155.1 billion.

The worry for Amazon may just start.

First, consumption has recovered. Among them, the recovery of offline stores is better, which echoes the good performance of Q3 travel industry.

Recent CPI data also show that retail consumer prices, including food and daily necessities, are also rising. Although the media are constantly publicizing inflation, the rising salary level also shows that most people can still cope with the current inflation.

Second, lower guidance is a comprehensive reflection of recession. Rising inflation puts pressure on the sustainability of consumer behavior, which is also illustrated by Amazon's downward adjustment of Q4 performance. Q4 is supposed to be the shopping season, and Black Friday is a strong season for Amazon.

Amazon also began to manage the expectation of the Great Recession, including cutting inventory, stopping some experimental projects, closing telemedicine services, and freezing recruitment including retail business, in order to streamline investment.

Third, Cloud business slow down, investment in all industries is being more cautious. Among Q3 companies, only Google's cloud business growth rate has maintained more than 30%, and Amazon's AWS ranks first in the industry, but its growth rate has also dropped to 27%, which represents the whole industry. The users of cloud business, often the most cutting-edge technology companies, have become cautious in investment and expenditure, which also needs more cash to save their lives and cope with the foreseeable recession.

Amazon lowered its expectations, allowing investors to vent their emotions greatly in this earnings cycle, which may also leave some room for contraction in the next few cycles.

If you stay in the green hills, you will not worry about burning firewood.