While the market’s attention remains firmly fixed on the ongoing banking sector fallout and the Federal Reserve’s potential response to the dilemma, Amazon (US:AMZN) added another wrinkle to the headlines. On Monday, the e-commerce and technology stalwart announced that it would lay off 9,000 workers.
Against the backdrop of the disclosure, AMZN stock slipped conspicuously, declining roughly 2% in the late afternoon hours and in aftermarket trading.
According to The New York Times, the headcount reduction will hit both corporate and tech workers, with the axe set to drop by the end of April. The layoffs add to the 18,000 folks Amazon already eliminated late last year and this past January, according to the firm’s CEO Andy Jassy in a note to employees.
This time around, though, the dismissals “will target workers in some of Amazon’s most profitable divisions, which had previously been spared, including Amazon’s cloud computing business and advertising operations,” wrote NYT’s Karen Weise. “Those two segments of the business are much higher-margin operations than Amazon’s core retail business, according to financial analysts and filings.”
TechCrunch reported that about 10% of those affected worked in the Amazon Web Services (AWS) unit, which saw its fourth-quarter 2022 growth rate drop to 20% from 39% in the comparable year-earlier period.
Per the memo to Amazon employees, Jassy mentioned that the annual planning session that management wrapped up last week focused on streamlining costs and head count. “The overriding tenet of our annual planning this year was to be leaner while doing so in a way that enables us to still invest robustly in the key long-term customer experiences that we believe can meaningfully improve customers’ lives and Amazon as a whole,” he wrote.
In some cases, layoffs may lift the publicly traded securities of impacted enterprises. At their core, job cuts focus on cost reductions, which may boost profitability if conduced appropriately. However, excessive layoffs may also depress share prices – as occurred with AMZN stock – due to concerns about business viability.
Notably, Amazon does not stand alone in its headcount dilemma. Nearly every major tech enterprise has laid off workers. Last week, Meta Platforms (US:META) announced plans to lay off approximately 10,000 employees, or roughly 13% of its workforce. Atlassian (US:TEAM) cut 500 full-time employees, or roughly 5% of its staff, earlier this month.
Adding to pressures for AMZN stock and its ilk is the global banking sector fallout and what it entails for broader economic stability. Amazon investors saw sharp stock price declines throughout 2022 as the Fed aggressively raised interest rates. Should the central bank continue its hawkish monetary policy, rising borrowing costs may impose a headwind on the growth-centric tech space.
Interestingly, Fintel’s Insider Sentiment Score of 43.36 for AMZN stock indicates below-average sentiment regarding insider accumulation. Moreover, the investment resource notes that the last time an insider acquired AMZN was on Oct. 1, 2020 (with the disclosure filed on Oct. 5, 2020).
This article originally appeared on Fintel
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