Tuesday's Headlines: Amazon Plans 10,000 Layoffs
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Etsy (ETSY) +3.5%
Netflix (NFLX) +3.2%
Wix (WIX) +2.3%
Arista Networks (ANET) +2.1%
Moving Down ⬇️
2U (TWOU) -13.1%
Stitch Fix (SFIX) -11.4%
Trupanion (TRUP) -11.1%
Hasbro (HAS) -9.9%
Redfin (RDFN) -9.2%
Amazon Plans 10,000 Layoffs 😟
Shares of Amazon (AMZN) fell more than 2% yesterday after the e-commerce giant announced that it was planning to lay off 10,000 workers. The job cuts will be focused on its devices division, human resources, and its retail division. The cuts represent about 3% of its corporate workforce and would be the largest in Amazon’s history.
The news is the latest in a long line of layoff announcements that have rocked the tech sector, following on from Meta shedding 11,000 workers and Twitter ousting roughly half of its staff after the Musk takeover.
The timing of the move will likely spook investors as we approach the holidays, the busiest time of the year for Amazon, and usually a point when the company takes on new staff. However, since his ascent to the top spot, new CEO Andy Jassy has been cutting expenditures by axing its telehealth service, shutting physical locations, and closing or canceling new warehouse locations.
After posting a net loss of $3 billion so far in 2022, compared to a net income of $33 billion last year, it was clear there were going to be some cutbacks. With its devices unit, which includes its Echo and Alexa products, reported to lose as much as $5 billion a year, it’s not surprising to see it first on the list.
Amazon stock is down 42% year-to-date and is currently on track for its worst year since 2008.
Apple’s Walled Garden Comes Under Scrutiny 🍎
Apple (AAPL) and Epic Games were back in court on Monday as the two companies continue their court battle over iOS policies. The legal battle, which has been going on for over two years now, focuses on the way in which Apple controls apps within its iPhone ecosystem. Epic, the makers of the massively popular ‘Fortnite,’ has argued that Apple behaves like a monopoly and takes an unfair cut of revenue generated by mobile apps.
In a ruling last year, a U.S. District Court judge went against all but one of Epic’s claims and rejected its request to force Apple to allow apps to be downloaded outside the App Store ecosystem. However, the judge did order Apple to allow app developers to take payments outside of Apple’s system — an order that has since been put on hold while the appeals process plays out. That process kicked off on Monday, however, the U.S. Justice Department is now involved in the case, which could spell trouble for Apple.
Apple’s lawyers have argued that the “walled garden” approach that Apple maintains over iOS and the App Store is important for protecting consumers. That approach involves human review of all applications within the iPhone operating system and prevents hackers and other bad actors from accessing consumer data.
Epic has argued that Apple is using that as an excuse to block competition from the mobile gaming space, in which it is a major player.
A ruling on the appeal could take up to a year according to experts.
TSMC Pops as Berkshire Buys In 💾
Shares of Taiwan Semiconductor Manufacturing Company, or TSMC, are soaring premarket following the revelation that Warren Buffett’s Berkshire Hathaway has opened a position in the company. Berkshire disclosed its purchase of 60 million shares yesterday to U.S. regulators and investors have responded by sending TSMC’s U.S. shares up 10% and counting.
This marks the most significant investment in a new stock by Berkshire Hathaway in the third quarter and further deepens Buffett’s newfound willingness to back tech-related ventures. The famed investor had long been averse to technology stocks, but these reservations appear to have been allayed following his rampant success investing in Apple — now Berkshire’s largest single holding.
In total, Berkshire purchased a $4.1 billion stake in TSMC, but declined to confirm whether or not it was Buffett himself who signed off on the deal or one of his portfolio managers. Considering the massive following Buffett possesses, it’s not unusual to see a company he’s backed spike following a purchase. Berkshire also declared new holdings in Jefferies Financial Group Inc. and Louisiana-Pacific Corp., both of which have seen premarket gains of 4% and 10% at time of writing, respectively.
TSMC is one of the largest chip manufacturers in the world and boasts significant weight in the current battle between China and the U.S. in the race for the upper hand in technology. Considering its manufacturing facilities in China, coupled with its partnerships with U.S.-based companies such as Nvidia, it will be a key player as these nations battle it out for supremacy in the coming years. Prior to market open today TSMC’s NYSE-listed shares are down over 43% year-to-date.