tiprankstipranks
Driven by Q1 Loss, Amazon Considers Cost-Cutting Options
Market News

Driven by Q1 Loss, Amazon Considers Cost-Cutting Options

Amazon.com, Inc. (NASDAQ: AMZN) is looking to sublease at least 10 million square feet of its warehouse space, following a decline in demand after almost two years of exceptional growth, a report published by The Wall Street Journal said, citing a person with knowledge of the matter.

The e-commerce giant is also considering options for ending or renegotiating leases with outside warehouse owners. These moves come after the company reported a loss in the first quarter of 2022. It was the first time in seven years that Amazon reported a loss.

A spokeswoman of the Washington-based company said, “Subleasing is something many established corporations do to help manage their real estate portfolio. It allows us to relieve the financial obligations associated with an existing building that no longer meets our needs.”

The source said Amazon has more-than-required space in some of its largest markets, including New York, New Jersey, California, and Atlanta.

Last month, the online retail firm reported a loss of $7.56 per share in the first quarter, compared with a profit of $15.79 per share in the previous year and the Street’s profit estimate of $8.35 per share.

Wall Street’s Take

Recently, Citigroup (NYSE: C) analyst Ronald Josey reiterated a Buy rating on the stock, with a $4,100 price target (101.7% upside potential).

In a research note, the analyst said, “While we recognize the concerns a weaker consumer is likely to have on Amazon’s retail sales and the impact of greater overall costs, we also believe Amazon can gain a greater share of retail sales in a more challenging macro environment.”

Overall, the stock has a Strong Buy consensus rating based on 35 Buys, one Hold, and one Sell. AMZN’s average price target of $3,647.08 implies 79.5% upside potential from current levels. Shares have lost 36% over the past year.

Website Traffic

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (NYSE: SEMR), the world’s biggest website usage monitoring service, offers insight into Amazon’s performance.

According to the tool, Amazon’s website traffic registered a 3.5% decline in global visits in April compared to March. However, the footfall on the company’s website has grown 7.5% year-to-date against the same period last year.

Conclusion

Even though 10 million square feet represents only 2% of the total warehouse space that Amazon owns or leases as of December 2021, it is not good news for investors, who have already been on the edge as AMZN stock has lost about 43% over the past six months.

The company’s shares were trading 5.4% down in Tuesday’s early trading session at the time of writing.

Learn more about the Website Traffic tool in this video by Youtube sensation Tom Nash. 

Discover new investment ideas with data you can trust.

Read full Disclaimer & Disclosure

Related News:
DIDI Stock Hits Cul-De-Sac
Snap Nosedives on Weak Outlook Amid Uncertain Economy
Top Insider Laps up TransDigm Shares Worth $26M

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles