Why Amazon Stock Is Getting Crushed Today

Amazon (AMZN -10.14%) stock was taking a dive this morning after the e-commerce giant posted third-quarter results that were mostly in line with expectations, but offered guidance for the fourth quarter that was much weaker than expected.

As of 10:02 a.m. ET, the stock was down 10.5%.

After posting 15% revenue growth in the third quarter, the company called for top-line growth to slow to just 2%-8% in the fourth quarter, dashing hopes that its business was reaccelerating after a lull in the first half of the year.

For the key holiday quarter, the company called for revenue of $140 billion-$148 billion, which was significantly short of the analyst consensus at $155.2 billion. Management said the guidance includes 460 basis points of foreign currency headwinds.

Macroeconomic headwinds seem to be the primary reason for the weak guidance, as on the earnings call, CFO Brian Olsavsky noted moderating sales growth trends through the third quarter due to inflation and higher energy prices, and also said macroeconomic uncertainties had caused Amazon Web Services customers to become more cost-conscious.  

The guidance overshadowed a mostly solid third quarter as revenue rose 15% in the quarter to $127.1 billion, which was slightly worse than analyst estimates at $127.5 billion. In constant currency, sales were up 19% as the stronger dollar affected results.

Earnings per share (EPS) in the quarter fell from $0.31 to $0.28, which beat estimates at $0.21. Excluding a gain from its stake in Rivian, however, EPS was $0.16.

The weak guidance shows that even Amazon isn't strong enough to escape the headwinds in the broader economy. The slowing growth may also indicate that the company is getting too big to put up the kind of growth numbers that investors are used to.

The company is on track to top $500 billion in revenue this year, meaning it would have to add another $100 billion in revenue next year in order to grow 20%. That's a towering obstacle for any company.

Amazon is focusing on controlling costs in AWS, e-commerce, and newer businesses in order to drive profitability, but investors will have to adjust their expectations to a more mature Amazon. Still, the tech giant looks well priced after today's sell-off and a 41% decline year to date.