Why Was Amazon the Worst-Performing FAANG 2021 Stock?

Why Was Amazon the Worst-Performing FAANG 2021 Stock?

Amazon shares ended 2021 as the most significant gap between the mega-cap tech houses. However, there is reason to think that 2022 for the company might be brighter for shares. Shares of Amazon grew by 2.4% in 2021. This figure lags significantly behind the other four FAANG stocks. Apple increased by 34%., Meta shares increased by 23%. Netflix won 11%. Alphabet, the best technical stock of the year, rose 65%. Tech Titan has been up 51% over the year at Microsoft. The Nasdaq Composite ended the year with a 21% increase. Amazon last saw such a destructive result in 2014, when shares fell 22%.

Analysts suggest several factors contributed to the failure of Amazon shares. Like other e-commerce companies, Amazon faces stiff competition from 2020 since the coronavirus pandemic has led to an increase in online orders. Consumers stopped walking to physical stores. To avoid exposure to the virus. Before that, they went to online retail stores for everything, facial moisturizers, everyday items, furniture, and everything in general. The move to online stores has boosted sales for several giants; Including Amazon, Etsy, eBay, Wayfair. Their growth rate was soon reflected in stock prices and consequently increased.

What Happened to Amazon

In the second quarter of 2020, Amazon’s profit increased three times a year. The first period reflects a pandemic in business and three quarters in a row. In the spring of 2021, when a growing number of Americans received the Covid-19 vaccine; Consumers gradually returned to the stores. Consequently, part of their expenses was shifted to pre-pandemic habits, including dinner at a restaurant, travel.

Although online shopping was still active, the company has seen its impressive annual growth rates slow down significantly. In the second quarter of 2021, Amazon revenue increased by 27%. This was a significant slowdown compared to the previous period last year. In 2020, sales increased by 41% over the same period. Amazon did not live up to expectations in its previous two revenue reports, affecting the shares.

Other key Amazon businesses; Cloud computing and advertising, had an excellent year last year. However, this did not overshadow the poor performance of Amazon’s core retail division. The low efficiency of the shares may have contributed to the direct retail business costs increase.

Reasons and Analysts Expectations

Amazon has been warning Wall Street for most of 2020-2021 that it will spend billions of dollars on coronavirus-related costs. Costs include safety measures for workers and the growth of the physical network to meet demand. It is worth noting that Covid-related costs were reduced last year. Amazon and other large corporations have been affected by global supply chain restrictions and labor challenges.

Additionally, Amazon has increased wages. It also offered bonuses to attract workers to the dense labor market. Due to the varying staff level in some warehouses, Amazon had to move packages over more extended and more expensive distances to facilities. Where there was enough staff to process orders. The labor challenge has severely affected Amazon shares.

Amazon in 2022

After a failed 2021, Amazon shares may have a better chance of returning effectively this year. After a slowdown in growth, the company will face a more straightforward comparison. It is expected that the firm will begin to reap the benefits of some of the pandemic-related investments; Both in logistics and the supply chain. Experts predict that growth should accelerate in 2022. Despite a slight increase in shares; Several analysts have named Amazon the best choice of the year. The fact is that technology enthusiasts and experts have high hopes for the giant.