the logo of US online retail giant Amazon at a distribution center
Ina Fassbender/AFP via Getty Images
Amazon is set to report earnings Thursday, and there’s likely even more pressure than usual on the company.
After all, Big Tech peer Meta Platforms (ticker: FB) released results after the close Wednesday, and the stock has since dropped some 25%—wiping out hundreds of billions of dollars in market value.
The parent company of Facebook , Instagram, and WhatsApp posted profits that were weaker than expected and outlined a dismal, if not anemic, outlook for revenue growth in the current quarter. It seems fewer people are using its social media platforms, and advertising dollars are harder to come by.
Meta’s plunge is extreme. The stock is on track to see its worst day ever in terms of percentage losses, by far; if it closes down more than 18.96% Thursday it will break that record.
The owner of Facebook—the name by which the company used to be known—is the fourth tech giant to report during this earnings season. Apple , (AAPL), Microsoft (MSFT), and Google parent Alphabet (GOOGL) all posted exceptionally strong results that cemented their place as the first, second, and third-most valuable public companies in the U.S. by market capitalization, respectively.
Facebook’s fumble makes it clear that it’s not their equal.
For years ‘Big Tech’ has been defined, perhaps spuriously, as the FAANMG: Facebook, Apple , Amazon , Netflix , Microsoft, and Google. This categorization suggests these companies have something more in common than being, in one way or another, focused on technology. Even that common denominator is shaky; Netflix’s streaming offerings are far more like traditional media companies, and wholly different from Meta’s social media platforms or Apple’s iPhone.
One thing that separates the groups is the diversification of their businesses. Apple, Microsoft, and Alphabet have built companies that sell, to a greater or lesser extent, hardware, software, and services like cloud storage and computing.
It’s an oversimplification, but Apple has the iPhone, iOS, and iCloud; Microsoft the Xbox, a suite of software including Windows, and the Azure cloud computing powerhouse; Alphabet its search, Chromebooks, Android OS, and Google Cloud.
Meta and Netflix don’t have that kind of diversity. Sure, Meta is expanding into the metaverse, but it’s an early bet on an emerging technology. Oculus virtual reality headsets have yet to take off. At its core, Meta’s business is advertising to people on social media platforms. Netflix, meanwhile, sells monthly subscriptions so that people can binge-watch movies and TV online.
The FAANMG companies also aren’t comparable in terms of value. Meta’s stock price collapse Thursday wiped out more than $200 billion in market capitalization, which is tens of millions of dollars more than Netflix’s total market cap. Meta’s value was sitting below $700 billion on Thursday; Apple’s market cap is near $3 trillion, with Microsoft and Alphabet closer to the $2 trillion club.
Amazon.com (AMZN) is more diversified than Meta and Netflix. The group founded by Jeff Bezos is built on the foundations of e-commerce, in which it remains dominant, though cloud computing and storage via Amazon Web Services are just as important parts of the company. Its devices include the Alexa virtual assistant and Fire Stick. And with a market cap of around $1.4 billion, Amazon is also bigger than those two fallen tech stars. But It’s also smaller than Apple, Microsoft, and Alphabet.
Now its earnings loom. Will Amazon beat earnings, like Apple, Microsoft, and Alphabet did? Or will it disappoint, the way Meta did, leading to its meltdown?
Amazon’s results Thursday will tell us which side of Big Tech it stands on.
Write to Jack Denton at [email protected]
