Tech

Amazon announces weaker-than-expected third-quarter revenue, stock plunges


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Amazon was profitable again over the summer after two consecutive quarters of losses, but its stock plummeted in after-hours trading on weaker-than-expected revenue and disappointing forecasts for the current quarter. in.

The Company on Thursday reported revenue for the three months ended September 30 of $127.1 billion, fueled by Amazon’s Official Day, a major sales event for premium Prime members has been pushed back to July this year from June of last year. That helped power Amazon increase the revenue was 15% year over year, an improvement from two quarters ago when revenue grew just 7% – the slowest in nearly two decades.

However, these numbers don’t match the forecasts of analysts surveyed by FactSet, who are expecting third-quarter revenue of $127.4 billion.

Amazon said it expects fourth-quarter revenue to hit $140 billion to $148 billion, up 2% to 8% year-over-year. The company says the guidance predicts an adverse impact from exchange rate fluctuations. Analysts had expected revenue of $155.1 billion.

“People’s budgets are tight, inflation is still high, and Electricity bill is the extra layer on top of that,” Amazon CFO Brian Olsavsky said in a media call. We are preparing for a period of slower growth. “

Shares of Amazon.com Inc. fell 13% in after-hours trading.

Overall, retailers have gotten bored of the holiday shopping season and are offering more deals to free up their inventory and appeal to budget-conscious consumers dealing with high inflation.

Amazon, along with other retailers, kicked off the holiday shopping season earlier this month, offering massive discounts to Prime members. second time this year. But the Seattle-based company’s weak forecast for the fourth quarter suggests it expected things to get tougher, said Neil Saunders, managing director at GlobalData Retail.

“In our view, this negative sentiment overshadows the current trading figures,” Saunders said.

The e-commerce giant said it made a third-quarter profit of $2.9 billion, or 28 cents per share. These numbers still represent a 9% year-over-year decline. And it was backed by a $1.1 billion pre-tax profit from Amazon’s investment in electric vehicle startup Rivian Automotive. Amazon’s operating income, which measures revenue after expenses, has nearly halved.

The retail giant’s results were similar to those of others this week as the economy became more difficult to navigate with high inflation and rising interest rates.

On Tuesday, Alphabet, the parent company of Google and YouTube, missed revenue expectations as advertisers pull back on their spending because of fears of a potential recession. Microsoft Post profit reduction in the context of weak computer sales.

And Meta, the company that owns Facebook and Instagram, report a decrease in revenue for the second quarter in a row amid a slump in its own advertising and concerns about whether the company is spending too much money on the idea of ​​the metaverse. Both YouTube and Meta are also facing more competition from TikTok.

Diverging from this trend, Amazon said its own advertising business grew 25% in the third quarter. Its AWS cloud business, another profitable unit, brought in $20.5 billion, up 27% from a year ago. But its growth has also slowed.

Powered by Prime Day, turnover are from online sales 7% increase. But Amazon’s retail business, which was thriving in the early days of the pandemic, has slowed dramatically since then, prompting the company to sublease, cancel or delay warehouses it doesn’t have. they have planned to open in different parts of the country.

The company is also cutting costs by cutting some of its projects, such as Amazon Care and fabric.com online shopand has implemented a hiring freeze on the corporate side of its retail business.

“Like most companies, we will be very careful in hiring,” Olsavsky said.


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