Amazon is attributing its weak revenue forecast to a busy news cycle that is affecting consumer behavior. The company’s finance chief, Brian Olsavsky, pointed to distractions such as the Paris Olympics, the upcoming U.S. presidential election, and high-profile events like an attempted assassination of former President Donald Trump as factors contributing to the expected decline in online shopping during the third quarter. Amazon anticipates revenue for the quarter to be between $154 billion and $158.5 billion, falling short of consensus estimates and causing its shares to drop more than 7% in extended trading.
Executives at Amazon acknowledged during a call with analysts that consumers are being cautious with their spending due to economic challenges. CEO Andy Jassy noted that shoppers are buying cheaper items, leading to a lower average selling price on products sold. Consumers are focusing on purchasing everyday essentials, which has impacted Amazon’s revenue for the quarter. Other e-commerce companies, such as Wayfair and Etsy, have also observed a slowdown in consumer spending on certain types of products.
The Olympics have further affected Amazon’s revenue forecast, as consumers may be deferring purchases during the busy news cycle and turning their attention to watching the games instead. While this may result in a short-term loss for Amazon, it has been a lucrative opportunity for NBCUniversal, the parent company of CNBC, which has generated over $1.25 billion in ad revenue from broadcasting the Paris Olympics. Amazon’s Olsavsky expects that once the distractions of the news cycle pass, consumers will return to making purchases.
Overall, the combination of a distracted news cycle, ongoing economic challenges leading to cautious spending behavior among consumers, and the impact of major events like the Olympics have contributed to Amazon’s disappointing revenue forecast. The company’s focus on selling cheaper items and consumers prioritizing everyday essentials has influenced its revenue for the quarter. While this may present challenges for Amazon in the short term, the company remains optimistic that consumer spending patterns will normalize once the distractions of the news cycle subside. Despite the setbacks, Amazon continues to navigate the changing landscape of e-commerce and remains a key player in the industry.
