(CapitalWatch, May 12, New York) Amazon (Nasdaq: AMZN) has all but wiped its pandemic gains, but it's not exactly surprising, and it doesn't mean the company is struggling.
The e-commerce company thrived in 2020 and 2021 as consumers opted largely for online shopping due to Covid lockdowns. Amazon's stock skyrocketed in the previous two years, its 52-week intraday high peaking at $3,773.08.
Now, over the past week, Amazon stock is down 7% and down more than 40% from the aforementioned 52-week high. At $2,138.61, AMZN is currently hovering just above its 52-week low price of $2,048.11 per share.
The blows Amazon has sustained are substantial, but current market conditions are bound to impact just about every company.
Oil prices are soaring due to the ongoing Russian war on Ukraine as countries scramble to boycott oil and gas from Russia. Booming inflation in the U.S. and the Fed's efforts to combat it with interest rate hikes are also hitting everyday consumers' wallets most. These macro conditions largely impact consumer spending, obviously a major aspect of e-commerce.
Consumers are also increasingly going back to physical stores as pandemic woes die down. Lockdowns also triggered a wave of demand for products like technology needed to work from home or extra disinfecting products.
E-commerce reigned supreme during the pandemic when shoppers had little choice. But now that options are open again, many are reverting to previous habits. It's only logical that companies wouldn't be able to maintain the same performance in a market not dominated by Covid impacts.
Pandemic gains were never realistic, and now the market has turned swiftly out of Amazon's favor. On top of outside influences, the company itself is doing little to reassure investors.
Amazon's latest earnings report showed its slowest growth in decades and gave forecasts that fell below expectations. Investors had already been shifting away from tech stocks, and such lackluster performance isn't going to draw people in.
A mass sell-off in the fallout of the Federal Reserve's benchmark interest rate hike also hit tech especially. Companies in the sector lost over $1 trillion in value over the weekend.
Although Amazon stock is sliding and the company has lost an exorbitant amount of value, the e-commerce titan is far from dying.
Revenue was up 7% according to its March report. Despite a 147% drop in net income, the company still drew $51.1 billion in sales, and Amazon Web Services brought $18.4 billion in revenue.
Changing market conditions are still as turbulent and everyday consumers are being pummeled in both a pandemic dominated economy or current conditions. Although the turmoil of the pandemic's influence on demand benefitted Amazon, the current conditions have clearly tipped out of the company's favor.