On Sept. 4, Amazon became the second U.S. stock after Apple to reach a market cap of $1 trillion. The stock closed at $2,039.51 a share that day, briefly giving it a market cap of $1.02 trillion. The stock’s value dipped below $1 trillion the next day, but for a few days at the end of September, it again earned the gilded honor as a member of the trillion-dollar club.
A brutal selloff in tech stocks has hammered Amazon this month, however. The company has fallen 25% from its record high point in early September, stripping a little more than $250 billion in market value from the stock.
The tech selloff has hit especially hard those tech stocks, like Amazon and Netflix, that have been investing heavily in future growth rather than focusing on near-term profits. That has left them with high valuations. Even after this month’s declines, Amazon trades at 82 times its forecasted earnings for 2018, while Netflix trades at 107 times its future earnings.
Adding to declines, Amazon reported earnings last week that showed revenue below Wall Street estimates. Amazon also warned that revenue growth in the current quarter—which includes the busy holiday season—would be as low as 10% and as high as 20%. Analysts had been forecasting revenue growth of 22% in the quarter.
While the loss in Amazon’s market cap is surely not going unnoticed in its Seattle headquarters, it’s unlikely to prompt CEO Jeff Bezos to alter his plans for the company’s future growth. Bezos has hewed to a growth-oriented strategy ever since he wrote his first letter to shareholders. Volatile stock swings in the company’s past have done little to change that long-term plan.