Amazon sends a shiver through global markets as gloomy sales forecast overshadows record Christmas sales

Friday, February 1, 2019
By Paul Martin

Amazon shares sunk 5 per cent after hours to $1,635 following a trading update
The firm toasted record quarterly sales growth – up 20 per cent over Christmas
It flagged concerns about new regulations in India which could hamper growth

1 February 2019

Amazon has perturbed investors with a warning that sales in the coming few months will come in below Wall Street’s high expectations.

The U.S. giant’s shares slipped 5 per cent to $1,635 overnight after it cautioned that growth is set to slow to between 10 and 18 per cent, as new regulations in India threaten to hamper progress in one of its key markets.

This took the shine off the record 20 per cent sales uplift it enjoyed over the last three months – the all-important Golden Quarter that includes Christmas and Black Friday.

Amazon’s bumper cloud computing business, along with merchant shipping and advertising fees, have helped boost the firm’s profits to $3billion (£2.2billion), compared with $2billion (£1.5billion) the year before.

Amazon boss Jeff Bezos said the voice recognition device – Alexa Echo Dot – was the star performer over the period.

But investors focused on the red flags, including a warning that Amazon – the world’s biggest online retailer – would step up its spending this year.

Neil Wilson, chief market analyst at, said: ‘There was a fair old basket of concerns raised by this earnings report.’

He pointed to stagnating sales in Amazon’s domestic North America market, softer economic profiles in Western Europe, the potential issues in India and currency headwinds.

‘International losses rose to $642million – a worrying development as this gap had been narrowing lately,’ he said.

Wilson added that Amazon’s popular Prime model may also be cause for concern.

‘Shipping costs are rising faster than sales growth, indicating how the Prime model based on free shipping may need adjusting. Higher Prime membership rates would be one obvious option to address this, although it did this already last year and there has been a slowdown subscription-services revenues,’ he said.

Despite the decline in its shares overnight, Amazon – listed on America’s NASDAQ index – is trading 18 per cent higher than this time last year.

‘Sellers may be wise to consider that one marginally softer quarter does not a bear case make,’ Wilson said.

The tech bellweather’s warning has dented risk sentiment in global markets as we head towards the end of the trading week.

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