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Amazon Showing Signs of Decelerating Growth

The limits of growth

Amazon is finding that its growth may be slowing, much like Apple:

Amazon.com just reported its best quarter ever and its worst quarter in years. That both are true speaks to the dichotomy inherent in evaluating what is—for now anyway—the world’s most valuable company.

As usual, Amazon beat Wall Street’s sales and earnings projections for the fourth quarter. Also as usual, Amazon’s forecast for the current period was highly conservative, with the midpoints of its revenue and operating earnings projections coming in below Wall Street’s targets. The company also says it expects to invest more heavily in its business in the coming year.

But deceleration has been something Amazon’s investors have long feared. The fourth quarter’s 20% growth rate is the company’s slowest since early 2015. Even the 45% growth pace of the company’s red-hot AWS cloud business is down from 49% just two quarters earlier.

Complaining about figures like those might seem odd at any other company, but Amazon’s superb execution and endless ambitions have resulted in an $840 billion in market value and a forward price/earnings multiple of 72 times. Some very lofty expectations are baked into those numbers, and sometimes even small doses of reality can be painful.

 
Doomberg

Written by Doomberg

I am Doomberg, one of the original founding members of Sparta Report, and have been here since the beginning. I am an insatiable news junkie and enjoy reading and writing about the US territories, the Caribbean, video games, smartphones, and of course conservative politics in general.

I also really like pictures of gas stations and claim full responsibility for the silly gas station motif. I'm presently trapped behind enemy lines in a blue state with no hope of escape! The ride never ends.

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