Amazon posts weaker-than-expected Q3 revenue, shares fall – KIRO 7 News Seattle

NEW YORK — (AP) — Amazon returned to profitability over the summer after two straight quarters of losses, but its stock fell sharply after hours on weaker-than-expected revenue and disappointing projections for the current quarter.

The company on Thursday reported revenue of $127.1 billion for the three months ending September 30, boosted by Amazon Prime Day, a major sales event for contributing Prime members that has been pushed back to July this year from June the previous year. That helped fuel Amazon’s revenue growth of 15% from a year ago, an improvement from the previous two quarters when revenue grew just 7% – the slowest in nearly two decades.

Still, those numbers fell short of forecasts by analysts polled by FactSet, who had expected third-quarter revenue of $127.4 billion.

Amazon said it expects fourth-quarter revenue to be between $140 billion and $148 billion, up between 2% and 8% from the same period last year. The company said the forecast anticipated an unfavorable impact from currency fluctuations. Analysts expected $155.1 billion in revenue.

“People’s budgets are tight, inflation is still high, and energy costs are an added layer on top of that,” Amazon chief financial officer Brian Olsavsky said on a media call. . “We are preparing for what could be a period of slower growth.”

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

Overall, retailers are feeling nervous about the holiday shopping season and are offering more deals to clear inventory and attract budget-conscious consumers in the face of high inflation.

Amazon, along with other retailers, kicked off their holiday shopping season earlier this month, offering deep discounts to its Prime members. for the second time this year. But the Seattle-based company’s weak guidance for the fourth quarter indicates that it expects things to get tougher, said Neil Saunders, chief executive of GlobalData Retail.

“In our view, this negative sentiment overshadows current trade numbers,” Saunders said.

The e-commerce giant said it earned $2.9 billion, or 28 cents per share, for the three-month period ending Sept. 30. These figures still represent a decrease of 9% compared to the same period a year ago. And that was helped by a $1.1 billion pretax gain from Amazon’s investment in electric vehicle startup Rivian Automotive. Amazon’s operating profit, which measures revenue after costs, fell nearly in half.

The retail giant’s results mimic those of other companies this week as the economy becomes harder to navigate with high inflation and rising interest rates.

On Tuesday, Alphabet, the parent company of Google and YouTube, missed revenue expectations as advertisers cut spending amid fears of a possible recession. Microsoft experienced a decline in profits amid weak computer sales.

And Meta, which owns Facebook and Instagram, reports a decline in revenue for a second straight quarter amid its own ad slump and concerns over whether the company is spending too much money on its metaverse idea. YouTube and Meta are also facing more competition from TikTok.

Bucking the trend, Amazon says its own ad business grew 25% in the third quarter. Its AWS cloud business, another profitable unit, brought in $20.5 billion, a 27% jump from a year ago. But its growth has also slowed.

Helped by Prime Day, online sales revenue grew 7%. But Amazon’s retail business, which was experiencing strong growth at the start of the pandemic, has slowed significantly since then, forcing the company to sublet, cancel or delay warehouses it had planned to open. open in different parts of the country.

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

“Like most companies, we’re going to be very careful in our hiring,” Olsavsky said.

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