Investors got a taste of that scenario on Thursday with the company’s third-quarter results. Growth was strong, with revenue surging 29% year over year to $ 56.6 billion. That still fell about 1% shy of Wall Street’s estimates. Growth will be much less impressive in the fourth-quarter, its busiest period of the year. Amazon projected sales in the range of $ 66.5 billion to $ 72.5 billion for the quarter. At the midpoint, that would represent growth of 15% year over year.
That would be Amazon’s slowest growth in more than three years, going back to the time before the company started breaking out the details of its cloud business, which in turn set the stock on fire. It would also represent a significant deceleration from the 28% growth the company has averaged over the last eight quarters. And while 15% growth is a significant number for a business generating more than $ 200 billion in annual sales, it is not the kind of growth Amazon’s enthusiastic investors have been banking on. Even after having shed 11% in value during this month’s tech selloff, Amazon’s shares are still at nearly 80 times forward earnings. Big Tech rivals Apple, Microsoft and Google-parent Alphabet Inc. all trade between 16 and 24 times.
Amazon said Thursday that part of the forecast is skewed by last year’s acquisition of Whole Foods, which began contributing to the company’s reported sales in last year’s fourth quarter. And the company’s bottom line is still booming. Operating income hit a record $ 3.9 billion in the third quarter, thanks in large part to record margins in the company’s AWS cloud segment. Amazon, in short, is doing just fine. But with an expensive stock in a market primed for fear, fine isn’t quite fine enough.
Write to Dan Gallagher at firstname.lastname@example.org