Amazon Inc. AMZN could join a bevy of companies that have cut jobs, with a report suggesting the ecommerce giant will let go of about 10,000 people in corporate and technology jobs, beginning this week.
What Happened: Commenting on the New York Times report, Loup Funds co-founder and Managing Partner Gene Munster said the rumored 10,000 headcount reduction would be about 3% of Amazon’s corporate workforce. In comparison, Meta Platforms Inc.’s META job cuts would amount to a 13% reduction, he noted.
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The analyst believes more than half of Amazon's cuts are in the Devices and Alexa divisions, which were once viewed as must-invest growth segments.
Munster said that "if we go into a recession in 2023," which is his base-case assumption, both Amazon and Meta "unfortunately will be making additional cuts."
Why It’s Important: Post-COVID-19, the global economy has had to face multiple risks, including an inflationary environment, frequent recurrences of the pandemic and war in Europe. These have acted as pushbacks, stifling any real recovery attempts.
To rub salt into the wound, global central banks were left with the unenviable task of raising interest rates to rein inflation. The Fed, for one, has raised interest rates six times since it began tightening rates in March, bringing it to 3.75%-4%. It has signaled that more could be on the way.
This evolving scenario has introduced caution among businesses, consumers and investors, and as desperate times call for desperate actions, companies are resorting to cost cuts, given the difficulty in growing the topline.
Price Action: Amazon closed Monday’s session down 2.28% at $98.49, according to Benzinga Pro data.
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