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Analyst blasts Amazon for running a ‘not-for-profit enterprise’

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Amazon.com Inc (NASDAQ: AMZN) is down another 5.0% on Thursday after a Needham analyst blasted its management for running a not-for-profit enterprise.

Needham analyst lowers estimates for Amazon’s FY23

Laura Martin forecasts a whopping $510 billion in revenue for the tech behemoth. But she’s thoroughly disappointed in its operating margin that she expects will sit at only 2.0% this year.

Costs will represent nearly $500 billion in FY222. Why is AMZN running a not-for-profit enterprise? At $510B of annual revs, AMZN clearly has scale. Is AMZN in a lousy business or do they do a lousy job running it?

The Needham analyst now expects Amazon to earn $1.85 a share in its financial 2023 – about 15% less than her previous forecast. She trimmed her sales estimate for the next year by 5.0% as well.

For the year, Amazon stock is down more than 50% at writing.  

What would it take for the Amazon stock to recover?

In November, Amazon.com Inc said it had started executing layoffs and planned on lowering its headcount by 3.0% to trim costs in the midst of a challenging macroeconomic environment (source).

But the job cuts, as per Laura Martin, may not be enough to sufficiently please shareholders. In a note this morning, she said:

AMZN states that they are focused on cost-cutting. We don’t object. However, investors also want AMZN to demonstrate upside pricing power in 2023, since cost-cutting has limits to driving valuation upside.

In its latest reported quarter, the Nasdaq-listed firm had $400 million of operating loss from its North America segment. Amazon stock is now trading below the low it made at the peak of the pandemic.

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