Amazon shares have dropped
Amazon’s capitalisation of the pandemic has seemingly come to an end. Amazon shares recently dropped by a huge 14%, the worst since 2006. From an outside perspective, this doesn’t look too good for the shareholders, but Amazon don’t seem too perturbed. According to their original sales predictions, they’re actually still on track. Here’s how…
The pandemic saw a huge surge in sales on Amazon over the last two years as more people spent time at home and shopping online. Amazon reaped the benefits and the unforeseen boost saw the first quarter of 2021 increase by 44% compared to the previous year. After these two mammoth pandemic-driven years, Amazon’s growth then began to slow – not completely surprising. Finally, it came to a halt in quarter 1 of 2022. As the economy began opening back up, the 3rd party marketplace took more shares back from Amazon retail.
Why aren’t Amazon worried?
The lack of growth for Amazon this year simply comes from comparing numbers with the last couple of years. The pandemic was an anomaly. It’s something that shouldn’t really be used as the analysis for average growth of the business. The figures are not something that could have been predicted.
Had the pandemic never happened, Amazon would actually still be on track. The unexpected growth has simply made today’s results look bad, hence the drop in shares. This reinforces that Covid-19 didn’t really accelerate e-commerce in the long run. Amazon even said they ‘currently have excess capacity in our fulfilment and transportation network’ after struggling to meet the increased demand during the pandemic.
Although to the general public, Amazon’s shares dropping isn’t a good sign, they actually offer a reasonable explanation. From this point on, e-commerce growth should be back to normal levels, provided the disrupted manufacturing and supply chains don’t cause too much havoc. We don’t think they’re going to be losing shareholders any time soon.
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