Amazon said a strong dollar cost it $900 million more than expected in the past quarter

Andy Jassy
Amazon has warned that the US dollar's surge this year cost it around $900 million worth of sales more than expected.Associated Press
  • Amazon warned the dollar's surge this year has cost it $900 million more than expected in sales.

  • The dollar has jumped nearly 16% in 2022, thanks to aggressive Federal Reserve interest rate hikes.

  • That means that Amazon is earning less on exports paid for in other countries' currencies.

Amazon has warned that the dollar's surge this year cost it $900 million more than expected when looking at net sales, contributing to its dismal third-quarter earnings performance.

The US currency has been on a tear higher, juiced by the Federal Reserve's interest rate hikes. It's climbed 15.6% this year so far, measured against a basket of six major currencies, and rose 4.7% in the third quarter.

The soaring dollar jumped by more than the 3.9% that Amazon had factored into its forecasts, eating into revenue, the online retailer's CFO said Thursday.

"As the dollar continued to strengthen during the quarter, the foreign exchange impact was higher than the 390 basis point impact we had incorporated into our Q3 guidance," Brian T. Olsavsky said on an earnings call.

"This represents a headwind of approximately $900 million, more than we initially guided to."

The Fed has hiked interest rates from near zero in March to over 3% now. That has attracted foreign investors seeking higher yields, who have rushed to buy dollars and sell other currency holdings.

A rapid appreciation in the greenback hits the revenue of a company like Amazon's, because exports paid for in other countries' weaker currencies bring in fewer dollars.

Olsavsky said Amazon's revenue growth is likely to keep facing dollar headwinds in the final months of this year, during the key holiday shopping season.

"As I look ahead to guidance for Q4, I think the biggest individual factor is still going to be foreign exchange," he said. "This guidance includes 460 basis points of unfavorable impact year-over-year."

"FX is a bigger issue for us on our revenue growth in dollars than it is on our income. It actually has a slight favorability, due to the investments we're making internationally," he added.

Amazon isn't the only tech giant to warn the surging dollar is weighing on its sales. Apple said Thursday that recent dollar strength is likely to compress its revenue during the fourth quarter.

Apple CFO Luca Maestri warned of a "nearly 10 percentage point" headwind — or roughly $12 billion — arising from the buck's appreciation against other currencies.

"Total company year-over-year revenue performance will decelerate during the December quarter as compared to the September quarter," he said on a third-quarter earnings call.

Amazon shares fell 10.6% to $99.26 shortly after Friday's opening bell, while Apple's stock price rose 4.1% to $150.78.

Read more: Amazon stock plummets 11%, threatening its trillion-dollar market cap after earnings warning about holiday sales

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