In its first 25 years as a public company, Amazon operating under one mantra, often disappointing Wall Street: growth matters more than profits.
Amazon’s cost-cutting: Founder Jeff Bezos outlined this strategy in his first investor letter in 1997.
But with three-quarters of 2022 on the books, the tone has changed. Andy Jassy, who took over as CEO in July 2021, is operating in a cost-cutting mode to save money. As Amazon faces declining sales and a bleak global economy. The stock is down 33% for the year. More than the S&P 500’s 25% drop, and is on track for its worst year since 2008.
A wave of austerity measures has cost Amazon’s investor and employee base over the past year below 650,000. In 2018 swelled to 1.6 million. In recent months, Amazon has shut down its telemedicine service, dropped its unique video calling projector for children, shut down everything. Still, one US call center had shut down its delivery robot, shut down a stationary chain that was underperforming, and shut down. Canceled or delayed some new warehouse locations. Amazon is also considering drastically reducing the size of skunkworks’ secret Grand Challenge lab, Insider reports.
On the hiring front, Amazon imposed a hiring freeze on the company’s positions in its retail stores. And last month’s annual hardware event, which typically features a list of gadgets. And robots that may or may not be available in a year or two. They was very limited compared to previous launch events.
“Taking it all together, Amazon seems to care a little more about margins than it has in the past,” said Tom Forte, an analyst at D.A. Davidson recommends buying stocks.
Jassy spoke at Amazon’s global shareholder meeting on Monday about its recent cost-cutting efforts.
“Good companies that stay, think long term, always have this pressure and pull,” Jassi said at the meeting, according to excerpts shared with CNBC. “There were a few years where they grew really big. Several years of checking profitability and working to tighten their belts a bit. And sometimes when you have multiple businesses, like we do at Amazon, some businesses are growing at the same time others are signing up.”