Amazon.com (NasdaqGS: AMZN) shares plunged on Friday, dragging down consumer discretionary sector-related exchange traded funds.
On Friday, the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) fell 3.4%, the Vanguard Consumer Discretionary (NYSEArca: VCR) dropped 3.4%, and the Fidelity MSCI Consumer Discretionary Index (NYSEArca: FDIS) was down 3.4%.
Meanwhile, Amazon shares declined 13.7%. AMZN makes up 22.8% of VCR’s underlying portfolio, 22.7% of XLY’s, and 22.1% of FDIS’.
Amazon shares reeled after posting the company’s first quarterly loss in seven years, reflecting a broadening economic trend toward lower online shopping, higher costs from inflationary pressures, and ongoing supply chain problems, the Wall Street Journal reports.
Revenue for the e-commerce giant was up by about 7% for the first quarter, the slowest pace in about two decades, as consumers returned to the real world and visited brick-and-mortar shops. Consequently, Amazon registered a loss of $3.8 billion in the first three months of the year, compared to a profit of $8.1 billion for the same period year-over-year, when more consumers were stuck at home and fueled a surge in online orders.
The volume of products Amazon sold over the quarter was largely flat year-over-year. The company even revealed a 3% year-over-year decline in its online store segment, which included product sales on its flagship site and digital media, reflecting the largest decrease since the numbers were first disclosed in 2016.
Amazon also saw slowing revenue growth from its subscriptions business, such as its Prime entertainment offerings, and in digital ads. Advertising services revenue expanded by 25% in the quarter, excluding currency impact. However, growth in advertising still fell short of the 33% pace for the fourth quarter of 2021 and 76% for the same period last year.
Looking ahead, the tech giant warned of further uncertainties, projecting current quarter operating income to fall between a loss of $1 billion and $3 billion in profits.
“The pandemic and subsequent war in Ukraine have brought unusual growth and challenges,” chief executive Andy Jassy said in a statement, adding that the company would improve by working through pressures from inflation and its supply chain.
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