Amazon Plans To Cut 18,000 Jobs, What To Expect?

Amazon’s stock (NASDAQ
NDAQ
: AMZN) has lost approximately 51% in 2022 as compared to the 25% drop in the S&P500 index over the same period. However, at its current price of $85, the stock is trading 39% below its fair value of $139 – Trefis’ estimate for Amazon’s valuation. While the company’s top line improved 15% y-o-y in the third quarter, its total expenses as a % of revenues increased as well, leading to a 9% decline in net income to $2.9 billion. Further, despite positive growth, the revenues were below the street expectations. The lower-than-expected growth was due to tough macroeconomic conditions and a drop in online retail sales.

In a recent development, the company has secured a term loan of $8 billion provided by DBS
DBS
Bank, Mizuho Bank, the Bank of China, and other lenders. It intends to use this to support capital expenditures, debt repayments, acquisitions, and working capital needs. Further, the firm plans to reduce around eighteen thousand roles, much more than the initially expected numbers. Notably, it communicated to eliminate around ten thousand roles in November 2022. While the numbers are significantly higher than the historical levels, it is also to be noted that AMZN boosted its workforce by more than 75% during the pandemic to manage the high demand.