Shares of e-commerce and cloud computing company Amazon (NASDAQ:AMZN) fell sharply today, closing the trading day down 6.3%.
The decline is likely due to a combination of continued market pessimism toward Amazon's recent earnings release, and a pullback in the broader market on Monday -- especially for tech stocks.
Amazon stock was slammed after the company's third-quarter earnings release, falling about 10% last Friday. Slower-than-expected revenue growth and a weaker-than-expected forecast for the holiday quarter's sales may have some investors worried about the company's ability to keep growing at such high rates, prompting a further sell-off Monday.
Though the company's earnings per share of $5.75 was far higher than a consensus analyst estimate for EPS of $3.08, revenue of $56.6 billion missed an average forecast for $57.7 billion. The company's guidance for fourth-quarter revenue between $66.5 billion and $72.5 billion was also below a consensus estimate for $73.8 billion.
Another factor driving the stock lower is a sell-off of tech stocks, as evidenced by the tech-heavy Nasdaq Composite's 1.6% decline Monday.
After Amazon's Monday decline, shares are down 14% over the past two trading days.
Notably, even though Amazon's revenue growth slowed from a second-quarter year-over-year growth rate of 39% in Q2 to 29% in Q3, the company is performing exceptionally when it comes to profitability. Amazon's third-quarter EPS, for instance, was up 11-fold. This obliterated analyst estimates.
Amazon expects more strong profitability. Management guided for fourth-quarter operating income between $2.1 billion to $3.6 billion; the midpoint of this guidance range is well above the company's $2.1 billion in operating income in the year-ago quarter.