Amazon’s market cap has plunged by hundreds of billions of dollars so far this year. Its shares have dropped 35%. Almost none of this can be attributed to its cloud business, which continues to be the world’s market share leader. And the size of this market is likely to continue to grow rapidly. Amazon’s cloud business may be worth more than its e-commerce business, although it is much smaller.
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The weakness of the retail sector, in general, was evident in the earnings from Walmart and Target. Each posted poor numbers and grim forecasts. Among their concerns was that inflation will eat margins and rising prices will keep consumers away. While Amazon has few physical stores, it cannot dodge the inflation factor.
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Amazon’s North American e-commerce business barely grew last quarter, and its profits plunged. Its International business suffered a drop in sales and lost money. The company indicated that investors should not expect improvements. Management said Amazon faces “ongoing inflationary and supply chain pressures.”
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AWS revenue grew to $18.4 billion in the most recent quarter. Operating income was $6.5 billion, up from $4.2 billion a year ago. Based on Amazon’s entire revenue change, AWS may well become the largest share of Amazon’s market cap. That means the value of e-commerce has collapsed.
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Amazon’s next quarter will prove that its original business is in share decline. That will drive the stock even lower. AWS is the only net to hold the shares from an even uglier plunge.
Troubling Problems Face Amazon, Except Cloud Business
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
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