New York, Feb 2 (GCBusiness) Shares of U.S. e-commerce giant Amazon fell into bear market territory on Friday after the company posted weaker-than-expected guidance for the first quarter of the year.
The stock sank 5.38 percent to close at 1,626.23 U.S. dollars per share, falling 20.7 percent from its previous intraday high of 2,050.50 dollars apiece scored last September.
Amazon hit 1 trillion U.S. dollars in market valuation in early September last year, when the stock price soared above 2,050.27 dollars per piece, becoming the second publicly traded U.S. company in history to reach the remarkable threshold after Apple.
After Friday’s decline, the company’s market cap was below 800 billion dollars.
The move came after the online retailer reported its latest quarterly earnings and 2019 first-quarter guidance.
After Thursday’s close, Amazon posted fourth-quarter earnings of 6.04 U.S. dollars per share on revenue of 72.4 billion dollars. Analysts expected earnings of 5.68 dollars a share on revenue of 71.9 billion dollars, according to Refinitiv data.
However, the impressive earnings boosted by strong holiday sales failed to woo investors as Wall Street worried about slowing growth. Amazon sales climbed 19.7 percent in the latest quarter, which was faster than the 18.8 percent expected, but still the slowest since the first quarter of 2015.
Meanwhile, the company’s 2019 first-quarter outlook was interpreted by many as downbeat.
Net sales are expected to be between 56 billion and 60 billion dollars for the first quarter of the year, said the company. The reading fell short of consensus estimates of 60.83 billion dollars.
Amazon executives noted Thursday that the e-commerce giant is likely to increase expenditure in 2019 than it did in 2018.
“In a lot of ways, 2018 was about banking the efficiencies of investments in people, warehouses and infrastructure that we had put in place in 2016 and 2017,” said Amazon CFO Brian Olsavsky.
“So while we will continue to concurrently drive growth and customer offering and Prime benefits, we certainly do take costs seriously and we will continue to work on operational efficiencies, I would expect investments to increase relative to 2018,” Olsavsky added.
Last November, Amazon announced plans to pick New York City and Northern Virginia for its two new headquarters.