If a certain terrible HBO series were still on, people would be saying, “Winter is coming.” The show is gone, but winter still is coming. The decline of easy money, rising interest rates, investor shock, and economic turmoil mean that Big Tech monopolies, among others are no longer being showed with cash by eager investors buying into the fantasy of infinite growth.
Netflix has been hammered, Facebook took a serious beating, but even Amazon, the most economically solid of the FAANG gang, is not immune from catching the economic cold.
Amazon is planning to lay off approximately 10,000 employees in corporate and technology roles beginning this week, according to a report from The New York Times. Separately, The Wall Street Journal also cited a source saying the company plans to lay off thousands of employees.
Shares of Amazon were down about 2.5% on Monday.
The cuts would be the largest in the company’s history and would primarily impact Amazon’s devices organization, retail division and human resources, according to the report. The reported layoffs would represent less than 1% of Amazon’s global workforce and 3% of its corporate employees.
Not so bad compared to some other companies, but a prep for challenging times.
The company has already announced plans to freeze hiring for corporate roles in its retail business. In recent months, Amazon shut down its telehealth service, discontinued a quirky, video-calling projector for kids, closed all but one of its U.S. call centers, axed its roving delivery robot, shuttered underperforming brick-and-mortar chains, and is closing, canceling or delaying some new warehouse locations.
Amazon reported disappointing third-quarter earnings in October that spooked investors and caused shares to sink more than 13%. It marked the first time Amazon’s market cap fell below $1 trillion since April 2020, and the report was the second time this year that Amazon’s results have been enough to spark a double-digit percentage sell-off. The sell-off continued for days after the report and erased almost all of the stock’s pandemic surge.
Amazon stock is down about 41% for the year, more than the 14% drop in the S&P 500, and is on pace for its worst year since 2008.
Google was ahead of the curve in its restructuring and cutting the various gimmicks that some corporate divisions had been allowed to play with. Amazon had to wait until the bad news was closer to home. And it’s still going to waste a fortune on another season of its woke Lord of the Rings prequel series along with a lot of other vanity projects.
Amazon and a lot of Big Tech are still living in an era where investors were lining up to throw money at them. A lot of Americans are suffering under the pandemic economy in the Biden era, but a reckoning is coming for Amazon: the chief profiteer of the pandemic.
But give Jeff Bezos some credit, he knew when to get out.