A drop of that magnitude would have the stock down more than 20%, putting it in a bear market.
Amazon's third-quarter profit blew away analysts' heady expectations, but it still managed to disappoint Wall Street.
The world's largest retailer is facing hurdles to boost sales in worldwide markets as well as increased competition at home from the likes of Best Buy, Target Corp and Walmart Inc, who are stepping up digital investments. "Amazon Business has now reached a $10 billion annual sales run rate and is serving millions of private and public-sector organizations in eight countries", Bezos said in a statement.
While Amazon's sales forecast missed estimates, USA shoppers are projected to increase their online spending by as much as 22 per cent this holiday season, according to Deloitte Insights. The Street wanted to hear $73.79 billion, but Amazon forecast between $66.5 billion and $72.5 billion.
Amazon forecast fourth-quarter operating income between $2.1 billion and $3.6 billion, below the $3.87 billion expected by analysts, according to FactSet. If they can continue to grow its cloud, advertising, and subscription services, its margins will continue to improve and given Amazon's massive revenue, this is a good recipe for mega profits down the line.
Shares of the company were down 9.0 per cent at $1,622 in morning trade. Amazon already offers free shipping on millions of products if a customer buys at least $25 of goods, but only offers two-day shipping at no additional cost to its Prime members. The chipmaker beat forecasts by 25 cents a share, with adjusted quarterly profit of $1.40 per share. It purchased online pharmacy PillPack in June, which followed its US$13.7 billion acquisition of Whole Foods past year to jump start its grocery business.
On Friday, the government is expected to report that the economy grew at a healthy 3.3 percent annual pace from July through September.
That's a 21 percent increase compared to the same time a year ago. Its overall subscription revenue, which comes not just from Prime, but also from Audible.com, Amazon Music, and other services, grew 52% from the third quarter a year ago to $3.7 billion.
The company's phenomenal success in recent years has also drawn criticism, with some, particularly U.S. Senator and former 2016 election candidate Bernie Sanders, alleging the tech giant underpays its warehouse workers, prompting CEO and founder Jeff Bezos to announce that the company will now raise its minimum wage to $15 (£11.53) per hour. Shares of No. 2 online ad firm Facebook Inc (FB.O), which faces questions about flattening usage limiting revenue growth, had fallen 12.5 percent and were trading at 19 times future earnings.