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Amid a gloomy global economy and slowing sales, e-commerce giant Amazon has come to a cost-cutting mode with a plan to preserve cash.
On Monday, November 14, the New York Times published a report stating that e-commerce giant Amazon is planning to lay off nearly 10,000 employees in technology and corporate roles this week. This could be another major layoff this month after tech giant Meta laid off 11,000 employees last week.
This could be the largest layoff in amazon’s history. The report also states that the layoff would majorly impact Amazon’s devices organization, retail division and human resources. This reported layoff would be less than 1% of Amazon’s global workforce and 3% of its corporate employees.
The NY Times report also mentioned that the exact number of layoffs remains fluid and is subject to change. By the end of 2019, Amazon had 798,000 employees. However, by December 31, 2021, this number shot up to 1.6 million full- and part-time employees registering a 102% increase.
An official representative from Amazon is yet to comment on this development. Interestingly, the development comes at a time when the holiday shopping season is approaching soon. The holiday shopping season is very critical for Amazon. In the past, the company has usually increased its headcount during this period.
However, this has been a rough year for Amazon and other tech companies amid monetary tightening measures initiated by the Fed.
E-Commerce Giant Amazon on Cost-Cutting Mode
Last month in October, Amazon announced a disappointing third-quarter result which led to a major drop in its share price. The AMZN stock is trading more than 13% down on the monthly chart. On Monday, the stock was down by 2.28% as reports of the layoff emerged.
With the recent correction in its stock price the company’s market cap also dropped under $1 trillion for the first time since April 2020. Also, this is the second time in history that Amazon results have sparked off a double-digit drop in its stock price.
The monetary tightening measures initiated by the Fed have led to a brutal correction on Wall Street. The AMZN stock is already trading at a 42% discount year-to-date. Now, this is three times the 14% drop in the S&P 500. This also makes 2022 the worst year for Amazon since 2008.
Andy Jassy, who took over as the CEO of Amazon last year said that the company is now in cost-cutting mode to preserve cash. This happens amid the gloomy global economic outlook and slowing sales. Currently, Amazon is conducting a comprehensive review of its business units. There are indications that some of the unprofitable outfits will be suspended or scrapped in due course.