Amazon shares rise as it sheds more jobs than expected
The online giant will now cut 18,000 positions, mostly at its Amazon Fresh and Amazon Go units. This news has resulted in shares climbing for a fifth consecutive day, bouncing off the near Covid lows it saw just after Christmas.
(Video Transcript)
Amazon shares up
The online giant Amazon has seen its shares rise almost 1% all sessions on the IG platform today.
It suggests a stronger start when trade gets underway on the cash session on Wall Street and comes after the news from the chief executive, Andrew Jassy, that the company is to shed about 18,000 roles within the business which employs around about 1.5 million people around the world.
So it is only a small proportion, but significantly the two areas that are going to be most impacted by this are Amazon Fresh, which is the online grocery store business, which has a disastrous TrustPilot rating, and Amazon Go, which is the only real strong move the company has ever made into bricks and mortar retailing. And it certainly seems like that is also causing a bit of a problem.
Share price chart
Let's take a look at the share price jump because as I said, it is up at the moment in the grand scheme of things.
In the last couple of weeks or so, it has got very close to this $81 level, which are the lows we had on the left hand side of this chart on the Covid lows.
Then, of course, we saw the 132.5 percent rise for Amazon as we all use Amazon more and more during lockdown. But since then, the going has got tough and the chief executive has said that they now acknowledge they employed too many people and indeed possibly also in the wrong areas.
Amazon Cloud
Now, the Amazon cloud business is one of the most profitable areas of the company, and that continues to grow. The company is not giving any details, but reports do suggest that it is in these two areas the Amazon Go and Amazon Fresh, which is where the jobs are most likely to go.
Also, the company says it's more than likely to have to shed some of the supporting admin jobs in HR and so forth as well to go along with this.
But the bottom line is that Amazon is up in today's session. It has seen the stock rise from this $81 level just at the back end of last year. So money is going back into the company, but the long-term prospects of these two parts of the businesses remain very poor.
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