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.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.