Yahoo Finance’s Julie Hyman, Diane King Hall, and Josh Schafer discuss Amazon stock trading lower after the company indicated a slowdown in consumer spending.
Video Transcript
JOSH SCHAFER: And we got to take it. One more loser on the day. Amazon dragging today despite an earnings beat, ending the day down about 4%. Executives on the earnings call revealing a weak outlook on cloud revenue as business cut– as businesses cut back on spending.
And another thing I was taking a look at here today, guys, was Amazon’s warning about the consumer. It wasn’t talked about a ton on the call. But they did mention specifically that the– warning, basically, of cautious spending from the consumer. And sort of– I was thinking about this. When you really zoom out and think about what Amazon is as a company, right, and Amazon– Julie, I know you were looking into this recently, too. Who are our bellwethers, right? The economic bellwethers.
DIANE KING HALL: Yeah.
JOSH SCHAFER: You have UPS coming out saying that–
DIANE KING HALL: They– yes.
JOSH SCHAFER: –consumer spending might be slowing down.
DIANE KING HALL: Right.
JOSH SCHAFER: 3M saying consumer spending might be slowing down, and now Amazon also teasing that out a little bit. Just a little ominous when you think overall about the consumer–
DIANE KING HALL: Yeah.
JOSH SCHAFER: –and thinking forward-looking, not what we saw at the beginning of the quarter. I know we talked a little bit yesterday about retail growth sort of leading GDP growth, right? But a lot of economists have pointed to that probably happening in January.
JULIE HYMAN: Mm-hmm.
JOSH SCHAFER: You’re talking about retail sales down 1% in March. And sort of thinking forward, what we’re seeing, it seems a little murky, a little gloomy.
DIANE KING HALL: So a little bit of some clouds on the horizon with regard to Amazon and Amazon’s losses capping. That’s why the NASDAQ was not the leader on the day. Amazon capping the gains that you saw on the NASDAQ on the day. So a little bit of cause for concern on the consumer, you know. But I’m still shopping at Amazon.
JULIE HYMAN: I mean, well, then I was going to say, the thing about Amazon is, it’s not just discretionary, right? A lot of the stuff that’s sold on Amazon is staples.
DIANE KING HALL: Right.
JULIE HYMAN: And so, well, while the e-com business for the first quarter in a while didn’t miss estimates, right, even though it wasn’t much changed year over year, you know, maybe that protects against a little bit of the downside otherwise for Amazon, the fact that it does skew to some of those staples, perhaps. And I thought the ad business was really interesting at Amazon, too, the increase in that ad business, as we talked about before with Snap, like, the sort of divide between the larger players and the smaller players.
DIANE KING HALL: Right.
JOSH SCHAFER: And they also hinted at trying to get that ad business more integrated in what they’re doing with Prime Video, too, right? And obviously, you guys know me. My head immediately went to Prime Video and sports, right? But how are they going to build out more with Thursday Tonight Football and kind of build out that ad business there? They teased it a little bit. We’re still months, months away from NFL season again.
DIANE KING HALL: Yeah.
JOSH SCHAFER: But it will be curious to see how they keep building on that and eventually build in–
DIANE KING HALL: Well, sports is big business.
JOSH SCHAFER: Well, and build in business back to your business through Prime Video, right? When are we going to get the QR codes and sort of tie in what you’re seeing on the TV into what you can then go buy online and kind of create that ecosystem, right?
DIANE KING HALL: Right.
JULIE HYMAN: Right. I know we– I feel like we’ve been talking about that for so long, and it just hasn’t quite materialized in the way that we thought maybe it was– I don’t know. I’m not necessarily unhappy about that. I mean, like– I mean, we’re– we’re assaulted enough, aren’t we?
[LAUGHTER]
I don’t know. OK. Josh– were we, though?
DIANE KING HALL: Sports and Amazon.
JULIE HYMAN: No. I just mean, like, with everything. Enough. I don’t need to buy something or switch– I don’t know. Like, let me just watch a game.
JOSH SCHAFER: You’re already buying stuff on your laptop while you’re watching TV anyway.
JULIE HYMAN: Oh, my gosh.
DIANE KING HALL: Yeah. [LAUGHS]
JULIE HYMAN: I guess make it seamless.
DIANE KING HALL: Yes.
JULIE HYMAN: I don’t know. All right, Josh. Thanks for helping us break down some of those numbers. Appreciate it.
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