What happened
Shares of Amazon (AMZN +0.16%) were moving lower today as several news items seemed to combine to weigh on the stock.
One analyst cut their profit estimates for the fourth quarter. The company reversed plans for a new fee it was going to charge to third-party merchants, and Wall Street seemed underwhelmed with the company's device presentation yesterday.
As of 12:27 p.m. ET, the stock was down 3.5%.
NASDAQ: AMZN
Key Data Points
So what
First, Wells Fargo said in a note this morning that it expected pressure on Amazon's operating income in the key fourth quarter, forecasting $2 billion headwinds from 250,000 seasonal labor additions, competition from the new TikTok Shop, and higher diesel prices, which raise freight costs.
The analyst also sees increased e-commerce competition impacting its fourth-quarter performance but maintained an outperform rating and a price target of $165.
Separately, Bloomberg reported last night that the company is ditching plans to charge a fee to merchants who don't use its shipping services, a possible response to a Federal Trade Commission's (FTC) antitrust investigation.
Finally, the market's response to the company's rollout of new devices and artificial intelligence (AI) features yesterday seemed to be tepid, and concerns about another Federal Reserve rate hike later this year could weigh further on the company's growth.
Now what
Amazon stock has steadily climbed this year, recovering from a sharp sell-off in 2022 when its e-commerce growth suddenly slowed as the global economy reopened from the pandemic.
The company is still facing challenges in Amazon Web Services, its cloud infrastructure unit, and sluggish growth in e-commerce, and its growth rate seems unlikely to return to pre-pandemic levels when it was 20% or higher, especially with annual revenue approaching $600 billion.
Keep your eye on the FTC investigation. Amazon still faces a number of risks, including on the macroeconomic level, but regulation could be the most serious in the short term.
