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Why Amazon Stock Slipped on Friday

The Motley Fool
The Motley Fool
 2022-01-21

What happened

Shares of e-commerce and cloud computing giant Amazon (NASDAQ: AMZN) are taking a punch in the gut today. Despite the stock already having slid sharply year to date, shares fell more than 4% on Friday. As of 1:25 p.m. ET, the stock was down 4.2%.

The slide is likely primarily due to bearishness in the overall market today, especially for growth stocks like Amazon.

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Image source: Getty Images.

So what

Showing how the overall market is pessimistic on Friday, the S&P 500 is down 1.1% as of this writing. And the tech-heavy Nasdaq Composite is down 1.6%, with many growth stocks, including Amazon, down several percentage points or more.

The market's sell-off on Friday seems to be prompted by Netflix 's (NASDAQ: NFLX) post-earnings 20%-plus drop. The company's guidance for first-quarter subscribers was far below expectations, prompting concerns from investors about intensifying competition for the streaming service. Tech stocks were already facing a lot of pressure, and Netflix's hit seemed to add to market fears.

Now what

Amazon will soon get a chance to prove that its sell-off has gone too far. The company's fourth-quarter earnings report is scheduled for Thursday, Feb. 3, after market close.

The quarterly report follows a dramatic slowdown in Amazon's revenue recently. After growing first-quarter 2020 revenue 44% year over year, growth slowed to 27% in the second quarter, and then 15% in the third.

Management guided for further deceleration in the fourth quarter. Specifically, Amazon said it expects revenue to be between $130 billion and $140 billion, translating to 4% to 12% year-over-year quarterly growth.

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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. His clients may own shares of the companies mentioned. The Motley Fool owns and recommends Amazon and Netflix. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy .

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