Amazon's fourth-quarter revenue guidance falls short of expectations, shares drop by 12% after hours

Amazon (AMZN.US) released its fourth-quarter revenue guidance on Thursday, which was overall below market expectations, raising concerns about weak retail demand during the critical holiday shopping season. Consumer spending is under pressure as rising inflation drives up household expenses. Amazon's share price fell as much as 12% after hours. Amazon expects fourth-quarter revenue to be between $240 billion and $247 billion, compared to the analyst average estimate of $244.51 billion. In the third quarter, Amazon Web Services (AWS) revenue rose 39% year-on-year to $46 billion, exceeding analysts’ expectation of 38.2% growth. The company also maintained its full-year capital expenditure forecast at approximately $220 billion. The weak fourth-quarter outlook indicates that with rising gasoline prices and increasing living costs, consumers are tightening their shopping budgets, and U.S. retailers may face pressure during the holiday shopping season. Although the retail business contributed the majority of Amazon’s revenue, in recent years investors have clearly shifted their focus to AWS.