Cost-Cutting Tactics Pay Off: Amazon’s Stock Surges, Earnings in the Green
Stocks
July 6, 2023
Amazon’s CEO Andy Jassy is out for blood — and the victims are underperforming employees and products.
- How it started: Between 2021 and 2022, Amazon went from making $33B in net income — to losing $6B.
- How it’s going: Amazon is in the process of laying off 27K jobs and canceling 37 projects. Next on the chopping block: Amazon’s Hollywood studio.
Growing losses have Jassy beginning to scrutinize content budgets (BBG) — with Amazon spending $7B on original programming last year — behind Disney’s $33B and Netflix’s $16.7B.
Prime’s 200M subscribers rival that of Netflix’s 232.5M — but since Amazon doesn’t break down numbers for its entertainment or streaming business, it’s difficult to gauge their success.
Streaming flops: High costs, low impact
Jeff Bezos wanted culture-defining hits like Game of Thrones, but instead — its shows are failing to live up to their massive budgets:
- Daisy Jones & the Six, The Power and The Peripheral each cost $100M+ to produce but failed to crack Nielsen’s 10 most-watched US shows.
- The Rings of Power was Amazon’s most expensive show ever produced — but the majority of viewers stopped watching before the finale.
Efficiency pays off: Like Meta, cost cuts have been working wonders for Amazon, and more cuts could be received well from investors. Its stock is up 55% this year — with earnings finally back in the green over the past two quarters.
