From e-commerce to grocery delivery, cloud computing, healthcare and video entertainment, Amazon (NASDAQ:AMZN) is a powerful competitor in multiple market sectors. Yet, the critics will always find reasons to worry about Amazon. If recent news about Amazon layoffs is making you nervous, don’t fret as AMZN stock is still likely on track for solid returns in 2024.
The bears and short sellers were wrong about Amazon last year, and some of them lost a lot of money. No matter how you slice it, Amazon is a practically unstoppable force, but this doesn’t mean the company always has to grow its workforce. So, let’s look into the latest developments and consider what they mean for Amazon stock investors.
Are the Latest Layoffs a Red Flag for AMZN Stock?
Here’s what you need to know. Amazon announced its plans to eliminate several hundred jobs at its Prime Video and MGM Studios divisions. Furthermore, Twitch, which is Amazon’s video-game livestreaming platform will lay off more than 500 workers.
Even when we combine the job cuts at Prime Video, MGM Studios and Twitch, they’re still a tiny part of Amazon’s total workforce. Besides, these job cuts are viewed as necessary.
Mike Hopkins, senior vice president of Prime Video and MGM Studios, explained, “We’ve identified opportunities to reduce or discontinue investments in certain areas while increasing our investment and focus on content and product initiatives that deliver the most impact.” Moreover, Twitch CEO Dan Clancy stated that his company is “meaningfully larger than it needs to be” after years of aggressive hiring.
The Amazon Job Cuts Aren’t Shocking
In other words, the latest round of layoffs isn’t really a red flag for AMZN stock. The company is just doing what needs to be done. If Twitch has been unprofitable since Amazon acquired it in 2014, then it’s not a drastic measure to eliminate some jobs at Twitch.
In any case, Amazon certainly doesn’t depend on its revenue from Prime Video, MGM Studios and Twitch. Wedbush analysts predicted Amazon is “on pace to generate $46.5 billion of advertising revenue” this year. So, Amazon will be just fine even if some of its divisions need to slim down.
Additionally, Amazon’s latest round of layoffs needs to be put in context. Amazon experienced rapid expansion soon after the onset of the pandemic. A hiring spree ensued, but that was years ago. In 2024, Amazon doesn’t necessarily still need all of those workers on its payrolls.
Certainly, Amazon isn’t the only “Magnificent Seven” company to implement layoffs in recent years. Amazon and other “Magnificent Seven” businesses might have to trim their workforces here and there in 2024. It’s not a reason to get shaken out of perfectly excellent investment opportunities.
Amazon Stock Can Still Provide Excellent Returns
Amazon is a behemoth that derives revenue from a variety of business divisions. Sometimes, adjustments have to be made in certain business units. Still, Amazon stock investors don’t need to worry about the company’s overall growth prospects.
The skeptics can continue to find reasons to worry about Amazon if they want to. That’s not your problem, as Amazon remains a highly profitable and diversified business. Therefore, until there’s a reason to believe otherwise, it’s fine to stay on the long side of the trade with AMZN stock.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
