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Amazon cautions: No matter what you are selling, when such events happen people shop less

Amazon reported a surge in quarterly profits on Thursday, August 1, surpassing analyst expectations. However, the e-commerce giant fell short of revenue estimates, sending its stock plummeting in after-hours trading. Despite earning $13.5 billion in the April-June period, a significant increase from the previous year’s $6.7 billion, investors were disappointed by Amazon’s revenue forecast for the upcoming quarter.The company projected sales between $154 billion and $158.5 billion, below analyst predictions of $158.22 billion.

Chaotic summer of news has distracted consumers

Amazon attributed the lower-than-expected revenue guidance to a distracted consumer base. The company argued that newsworthy events, such as political unrest and the Olympics, had diverted consumer attention away from shopping. This, in turn, impacted purchasing decisions and overall sales.
“When high profile things happen, or the assassination attempt a couple weeks ago, you’re seeing that people shift their attention to news,” Brian Olsavsky, Amazon’s finance chief, said on a call with reporters, adding, “This is going to be a tough quarter to forecast.”
Olsavsky said consumers were favoring lower-cost products and those that arrive quickly. But when customers are distracted by the news, they sometimes skip purchases entirely.
“No matter what you’re selling or providing to a customer base, customers only have so much attention and the things like the Olympics, although they don’t happen that often, we do see different traffic patterns around those events,” Olsavsky said.
“When high-profile things happen or the assassination attempt a couple of weeks ago, you see that people shift their attention around the news,” the executive added.
Amazon CEO Andy Jassy too echoed a similar view, he said on a post-earnings call that customers were trading down on price when they could.
Amazon’s cloud profit shines
While the company’s cloud computing division, Amazon Web Services (AWS), continued to perform strongly, with revenue rising 19% to $26.3 billion, it was not enough to offset the broader revenue shortfall. AWS’ strong performance comes just days after Microsoft’s cloud division Azure fell short of market estimates and sparked more concerns around Big Tech’s hefty AI spend.

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