Amazon is pointing to an unusually busy news cycle as one of the drivers behind its weak revenue forecast.
On a call with reporters following the company’s second-quarter earnings report on Thursday, Amazon finance chief Brian Olsavsky said one reason the company expects a slippage in online shopping this quarter is because consumers are distracted. There’s the Paris Olympics, which began last month and continues through Aug. 11, as well as the ramp-up to the U.S. presidential election in November.
Olsavsky also pointed to the attempted assassination of former President Donald Trump at a Pennsylvania rally last month, which occurred just before the Republican National Convention.
“Customers only have so much attention,” Olsavsky said. “When high-profile things happen, or the assassination attempt a couple of weeks ago, you see that people shift their attention to news. It’s more about distractions.”
For the third quarter, which runs through September, Amazon said it expects revenue of $154 billion to $158.5 billion. The midpoint of the range, $156.25 billion, fell short of consensus estimates of $158.24 billion, according to LSEG. The disappointing guidance, coupled with a revenue miss for the second quarter, sent Amazon shares sliding more than 7% in extended trading.
The chaotic news cycle isn’t the only factor affecting consumer spending patterns, a topic that company executives didn’t even bring up with analysts on the call.
One big issue they did address with analysts on the call is that shoppers continue to be cautious with their spending due to economic challenges. CEO Andy Jassy said consumers are buying cheaper items, meaning there’s a lower average selling price (ASP) on products sold.
“Customers continue to trade down on price when they can,” Jassy said. “More discretionary, higher ticket items like computers or electronics or TVs are growing faster for us than what we see elsewhere in the industry but more slowly than we see in a more robust economy.”
On the media call, Olsavsky said consumers are “continuing to be cautious” and are more focused on buying everyday essentials, which helps explain why Amazon “came in a little short” on revenue for the quarter.
Other e-commerce companies have made similar observations. Wayfair saw a slowdown in home goods purchases due to inflation and a stagnant housing market. Etsy CEO Josh Silverman said in an interview on CNBC’s “Squawk Box,” following second-quarter earnings on Wednesday, that “it’s a tough time for the consumer,” and that “every industry is really seeing it.”
When it comes the the Olympics, Amazon’s loss is NBCUniversal’s gain. The company, which is the parent of CNBC, said this week that it’s hit at least $1.25 billion in ad revenue from broadcasting the Paris Olympics.
“More than 70% of advertisers for the 2024 Summer Games are new, with nearly half a billion dollars coming from first-time sponsors,” the company said in a statement on Wednesday.
It’s a short-term blip for Amazon, but one that Olsavsky says contributes to a difficult forecast.
“A lot of times, purchases will defer and you know people will come back and buy what they were going to buy,” he said.
Disclosure: CNBC parent NBCUniversal owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. broadcast rights holder to all Summer and Winter Games through 2032.
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