Amazon obtains $8b loan, adopts cost-saving measures and market cap falls below $1tr.

In preparation for market challenges, Amazon has received an $8 billion loan.

The loan, which was provided by DBS Bank, Mizuho Bank, and others, would be used for “general corporate activities,” according to Amazon in a filing with the U.S. Securities and Exchange Commission. It will mature in 364 days (January 3, 2024), with an option to extend for another 364 days. An Amazon spokeswoman told reporters in a statement that the loan is another funding option the firm has used recently to protect itself against the “uncertain macroeconomic environment.”

The spokeswoman added in an email that “like any firms, we continuously analyze our operational plan and make financing decisions — like entering into term loan agreements or issuing bonds — accordingly.” In order to support capital investments, debt repayments, acquisitions, and working capital needs over the past few months, we have utilized a variety of financing methods.

As the economy started to suffer, Amazon’s revenue started to decline around the end of 2022. During the epidemic, the IT Company doubled the scale of its fulfillment network, an investment that initially paid off but ultimately proved to be shortsighted.

As e-commerce sales last year expanded more slowly than anticipated, Amazon was forced to cancel or postpone plans for more than a dozen locations. Amazon’s business was significantly impacted by another headwind, rising energy prices, with the company’s shipping expenses rising 10% to $19.9 billion in Q3 2022.

Amazon intends to downsize its employment by as many as 10,000 workers in early 2023 in order to minimize costs. The company’s largest-ever layoffs are reportedly focused in the retail, Alexa, and human resources departments of Amazon.

Amazon has also stopped hiring for corporate positions in its retail division, shut down its Amazon Care telemedicine service, terminated all but one of its U.S. call centers, and scaled back its long-running Amazon Scout delivery robot project as other cost-cutting measures. Despite these actions, the company’s market valuation is on track to drop below $1 trillion for the first time since April 2020.