Amazon shares fell 10% in extended trading on Thursday after releasing sales forecasts that beat analysts’ forecasts.
Here’s how the company does it:
- Earnings: $7.38 per share, adjusted for an estimate of $8.36, according to Refinitiv
- Revenue: $116.44 billion versus the expected $116.3 billion, according to Refinitiv
- Here’s how Amazon’s other critical segments performed during the quarter:
Amazon Web Services: $18.44 billion versus $18.27 billion expected according to StreetAccount
Advertising: $7.88 billion versus $8.17 billion expected according to StreetAccount
Amazon shares fall posted a $7.6 billion loss on its investment in Rivian after the electric vehicle company’s stock lost more than 1/2 its value in the quarter. This resulted in a total net loss of $3.8 billion.
Amazon shares fall revenue was up 7% in the first quarter, compared with a 44% expansion. It was the slowest pace since the dot-com crash in 2001 and its second straight period of single-digit growth. Forecasts for the second quarter suggest year-on-year growth could fall further from 3% to 7%. Amazon forecast sales of $116 billion to $121 billion this quarter, with analysts missing the $125.5 billion average forecast, according to Refinitiv.
Like Google and Facebook earlier this week, Amazon attributed much of the slowdown to macroeconomic conditions and Russia’s invasion of Ukraine.
“The pandemic and subsequent war in Ukraine have brought tremendous growth and challenges,” said Amazon CEO Andy Jesse. He added that the company is “fully” focused on balancing costs across its deployment network now that staff and warehousing capacity are average.
Amazon faces several economic challenges, including rising inflation.
Higher fuel and labor costs, global supply chain problems, and the ongoing pandemic. To offset some of those costs, Amazon introduced a 5% mark-up to some of its retailers in the United States. Earlier this month, the first fee in its history. And last quarter, Amazon raised the price of its US membership. Prime for the 1st time in four years to $139 from $119.
Profits are still reflected. The company’s operating margin, or cash remaining after accounting for operating expenses, fell to 3.2% in the first quarter from 8.2% a year earlier.
“This may take some time, particularly as we work through current inflation and supply chain pressures. But we are seeing encouraging progress across several dimensions of customer experience. Including delivery speed performance, as we now approach unprecedented levels approaching the month ahead. Ahead of the pandemic in early 2020,” Jesse said.