E-commerce and cloud computing giant Amazon (NASDAQ:AMZN) continues to seek more cost cuts to improve its profitability against a tough macro backdrop. The company is laying off more than 180 additional employees in its Games division following 100 job cuts in the first round in April. In an email to employees on Monday, Christoph Hartmann, vice president of Amazon Games, said the company needs to focus its resources on businesses with high growth potential. The cost cutting moves are being made even though the Amazon stock price has surged 70% year-to-date.
Cost Reduction Efforts
As part of its restructuring efforts, Amazon will shut down its Game Growth initiative that helps game makers market their titles. It will also close its Crown channel, which streams on Twitch. Hartmann added that the company will now direct its attention to the upcoming launches, including Throne and Liberty and Blue Protocol as well as future titles such as Tomb Raider and The Lord of the Rings.
Amazon continues to reduce its headcount and restructure its businesses to improve its margins and mitigate the impact of macro pressures and intense competition. Last week, the company reportedly started reducing its workforce in its streaming music and podcast unit. It also slashed some roles in its human resources unit called People Experience and Technology. The company has laid off around 27,000 employees over the past year.
Amazon’s cost reduction and streamlining efforts are delivering the desired results. In Q3 2023, Amazon’s operating margin improved significantly to 7.8% from 2% in the prior-year quarter. The company’s earnings per share (EPS) jumped by an impressive 236% to $0.94, thanks to solid revenue and enhanced margins.
Is Amazon a Buy or Sell?
Amazon’s dominance in e-commerce and cloud computing and growth potential in areas like advertising have helped it score Wall Street’s Strong Buy consensus rating based on 40 unanimous Buys. The average price target of $175.51 implies 23% upside potential.
