Amazon ‘s (AMZN) plans to cut 18,000 workers is a drop in the bucket relative to its workforce of roughly 1.5 million. It’s likely just the beginning as the e-commerce and cloud giant struggles to get a grip on its expenses. Amazon CEO Andy Jassy on Wednesday announced the cuts in a blog post addressing employees after The Wall Street Journal had broken the news earlier that day, indicating most of the layoffs would impact Amazon’s retail and recruiting operations. As of November, Amazon had reportedly been looking to let go of around 10,000 workers after having hired roughly 300,000 people during the height of the Covid pandemic to meet booming online shopping demand. “They hired a huge number of people … firing 18,000 people frankly is nothing,” Jim Cramer said Thursday on CNBC. “One of the reasons why the stock isn’t up more is because they didn’t fire enough people. Jassy is not done,” he added. Shares of Amazon, which closed out 2022 down more than 50%, initially edged up Thursday morning before later falling more than 1% to around $84 apiece. The Club has been calling for Amazon to rein in spending and address its bloated workforce, particularly as the company faces inflation, high interest rates and a slowing global economy. “If there are too many people, they need to let some people go,” Jim had said Wednesday. Amazon’s announcement comes as the tech industry more broadly faces mounting investor pressure to manage ballooning costs. Club holding Salesforce (CRM) on Wednesday rolled out a cost-cutting plan that includes a 10% reduction in its workforce — a much-needed move with a potential recession looming on the horizon. Club holdings Meta Platforms (META) and Microsoft (MSFT) , as well as Netflix (NFLX) , Snap (SNAP) , and Tesla (TSLA) , have announced layoffs in recent months, as they contend with slower growth and plummeting stock prices. “These changes will help us pursue our long-term opportunities with a stronger cost structure ; however, I’m also optimistic that we’ll be inventive, resourceful and scrappy in this time when we’re not hiring expansively and eliminating some roles,” Jassy wrote Wednesday. Bottom line These layoffs are a good start, but don’t go far enough. While letting go of staff is always a difficult decision, the company needs to further reduce its workforce to be able to grow again. If there are more cuts ahead, the market will likely reward the stock and push it higher. Amazon is in a difficult spot. Amazon Web Services, the company’s profitable cloud unit, is facing slower growth and increased competition, while its advertising division faces pressure as companies rein in marketing expenses. The tech giants made the mistake to overextend their businesses and that has finally caught up with them. Meta announced in November it was letting go of roughly 13% of its workforce , but those cuts are insufficient, too. Club holding Alphabet (GOOGL) will also likely need to eliminate jobs in the near future. More broadly, we hope Amazon and other tech giants will see some relief this year from cooling inflation and a softer U.S. dollar . (Jim Cramer’s Charitable Trust is long AMZN, CRM, GOOGL, MSFT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
The regulator was concerned with Amazon’s dual role as both a marketplace and a competitor to merchants selling on its platform.
Nathan Stirk | Getty Images
Amazon‘s (AMZN) plans to cut 18,000 workers is a drop in the bucket relative to its workforce of roughly 1.5 million. It’s likely just the beginning as the e-commerce and cloud giant struggles to get a grip on its expenses.
