Amazon has lowered its revenue forecast for the third quarter, attributing the weaker outlook to a crowded news cycle and ongoing economic challenges. The company expects revenue to fall between $154 billion and $158.5 billion for the quarter, with the midpoint of $156.25 billion coming in below analysts’ consensus estimate of $158.24 billion. This disappointing guidance follows a revenue miss in the second quarter, which led to a more than 7% drop in Amazon’s share price in extended trading on Thursday.
Brian Olsavsky, Amazon’s Chief Financial Officer, explained that one significant factor behind the company’s tempered revenue expectations is the current media frenzy. With major events like the Paris Olympics, which began in July and runs through August 11, and the upcoming U.S. presidential election in November, consumers are increasingly distracted. Additionally, the recent attempted assassination of former President Donald Trump during a Pennsylvania rally has diverted public attention further.
“Customers only have so much attention,” Olsavsky said during a call with reporters. “When high-profile events occur, such as the assassination attempt, people shift their focus to news and distractions, which impacts shopping behavior.”
The turbulent news cycle is just one aspect affecting Amazon’s sales. Economic factors also play a crucial role. CEO Andy Jassy highlighted that consumers are increasingly cautious with their spending due to economic uncertainties. As a result, shoppers are gravitating towards lower-priced items, leading to a decrease in the average selling price of products on Amazon’s platform. Jassy noted that while the company sees growth in categories like computers and electronics, the pace is slower compared to a stronger economic climate.
Other e-commerce players are experiencing similar trends. Wayfair has reported a slowdown in home goods purchases amid inflation and a stagnant housing market. Etsy’s CEO Josh Silverman echoed these sentiments, stating that the current consumer environment is challenging and impacting various industries.
While Amazon faces short-term revenue pressures, Olsavsky remains optimistic that this is a temporary setback. He believes that many purchases will be deferred rather than canceled, with consumers returning to buy once their attention shifts back to shopping.
In contrast to Amazon’s struggles, NBCUniversal is reaping the benefits of the Olympic Games. The media giant has reported over $1.25 billion in ad revenue from its coverage of the Paris Olympics, with more than 70% of advertisers being new and nearly half a billion dollars coming from first-time sponsors.
