Amazon stock closes Monday lower after announcing 9,000 additional layoffs

Yahoo Finance anchors discuss Amazon's decision to cut an additional 9,000 jobs as its stock continues to fall.

Video transcript

DAVE BRIGGS: All right, let's take a look at Amazon shares closing in the red after the company announced another set of layoffs. We spoke with DA Davidson senior research analyst Tom Forte, who's covering the tech giant. Here's what he had to say about today's stock move.

TOM FORTE: I think the stock's down because this suggests that the March quarter is not very good. So the fact that here we are on March 20 and they're doing another round of layoffs suggests that things are not going very well at Amazon, including the higher-margin businesses, cloud computing and advertising.

SEANA SMITH: What are you expecting from the March quarter? How bad could it potentially be?

TOM FORTE: I think there could be continued weakness in the quarter. We're about to publish a white paper where we look at e-commerce sales in general, and our thesis is that e-commerce in the future will grow at a slower rate.

DAVE BRIGGS: What was particularly interesting about these layoffs at Amazon today is where they came, not how they came. We knew that there was going to be more, and, in fact, Tom says there will be more layoffs on the horizon, but they came in sectors that are typically very profitable for Amazon. In particular, the two that jump out to you, advertising and AWS, which has been really the profit driver for Amazon.

But he said, look, in a way, they've already done that in e-commerce, 100,000 through-- really, this is attrition like you've never seen at Amazon. So they didn't replace around 100,000 people that left.

Some believe that the stock action today was actually based on a report from Politico about Lina Khan and the FTC continuing to examine Amazon, looking at breaking them up, and then maybe blocking yet another deal-- this one would be the acquisition of iRobot-- over data-privacy concerns. And that is a story that will continue to play out with Lina Khan, the FTC. We've also seen it with the DOJ really taking an aggressive stance towards big tech.

SEANA SMITH: Yeah, certainly, and I think that's one of the risks here going forward. Although Tom Forte didn't seem too concerned about the FTC and some of the regulatory hurdles, at least in the near term when it comes to Amazon. I think there's lots of questions just about the slowing growth that we have seen at Amazon over the last couple of quarters and how much slower that growth could potentially be over the next quarters given the fact that the company is cutting from some of its divisions which it relies heavily on which has been very profitable for the company in the past.

Andy Jassy, the CEO there, saying that it was because of the uncertain economy in which we do reside, that that uncertainty that exists right now in the near future is forcing Amazon to become a little bit more streamlined and forcing the company to save costs where it can. There could be more cuts on the table. The size of those, though, is something that's out for debate right now.

DAVE BRIGGS: Well, look, nobody has better data on the consumer than Amazon, and what they see generally tells of a worsening economic story. We learned that was their impression when they began to scale back plans for HQ2, their second headquarters in Virginia, dramatically cutting back what they plan to do there. So, look, Amazon really has a great read, probably like a lot of the big banks here, on what is coming, and they do believe it is a souring economy.