After becoming the first company to lose $1 trillion in market valuation (yes, ever), Amazon is taking a long, hard look at its business, because something just ain’t right.
- After raking in US$33 billion last year, Amazon has so far lost US$3 billion this year and is projecting its slowest revenue growth for a once-booming holiday quarter.
What happened: CEO Andy Jassy is heading up a company-wide cost-cutting review on top of other profitability measures taken this year, including shuttering some physical stores, freezing corporate hiring, and renewing focus on profitable areas like healthcare.
- One employee not pulling her weight: Alexa. Amazon’s devices division, which includes the voice assistant, has reportedly lost the company US$5 billion annually.
Why it's happening: In a recessionary environment, companies that before had benefitted from record-high consumer spending are taking a long, hard look at their books.
- Amazon has undertaken cost-cutting reviews before (most recently in 2017) but none have been as extensive as the one currently happening, execs told The WSJ.
Why it matters: The era of endless expansion (Amazon), unchecked hiring (Twitter), and costly new business lines (Meta) is over. Companies will likely enter the new year striving for low costs and a clear focus since it’s the only way they’ll be able to regain their footing.