Amazon reported on Thursday its first quarterly loss since 2015, its large amount of money stalled due to a slowdown in pandemic-induced online shopping and a sharp reduction in its investment in an electric vehicle startup.
The Seattle-based e-commerce giant shares nearly 10% off-hours trading.
Amazon reported a loss of $ 3.84 billion, or $ 7.56 per share, during the first three months of the year. A year ago, it posted a profit of $ 8.1 billion, or $ 15.79 per share, during the first quarter. Wall Street analysts had expected a $ 8.35 per share profit over the last quarter, according to FactSet.
The red ink ocean of Amazon’s report comes from the company’s accounting for a $ 7.6 billion loss in its investment in shares in Rivian Automotive.
Still, the slowdown in online spending is real and widespread. Although in-store sales rose, March is the first month to show a decline in online sales since the pandemic began, according to Mastercard SpendingPulse, which tracks spending on the payments network. Mastercard and survey estimates for other cash and check payments.
Amazon thrived during the COVID-19 pandemic, as people confined to their homes and eager to limit human contact went online to buy what they needed. But growth has slowed as vaccinated Americans feel more comfortable going out. According to e-commerce research firm MarketPlace Pulse, the value of products sold on Amazon last year has grown by half compared to 2020.
“Given the pace at which the business has grown over the past few years, this change is not surprising, so it represents more of a post-pandemic recovery than a catastrophic failure,” said Neil Saunders, CEO of the consultancy. GlobalData, in an email.
Like many others, Amazon is facing inflationary pressures, supply chain problems, and labor shortages. Last quarter, the company increased its annual membership fee to Prime by $ 20, the first since 2018. To offset rising fuel costs and inflation, it has also added a 5% surcharge to rates which charges third party vendors who use their compliance services.
“Amazon’s problem is that while sales growth has moderated, cost growth hasn’t,” Saunders said. “Compared to last year, the cost of sales has increased by 63% and compliance costs by 46%. Other costs have also increased a lot. In short, the cost of running Amazon, which it was already high, it is rising dramatically. “
The leader of the Amazon workers’ union talks about the success of New York
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Revenue increased 7% to $ 116.44 billion, compared to $ 108.52 billion in the first quarter of 2021, the company’s sixth consecutive quarter of revenue in excess of $ 100 billion. Amazon had projected sales of between $ 112 billion and $ 117 billion. Analysts polled by FactSet expected $ 116.5 billion.
The results come when the company faces aa growing drive of unionization from within its workforce. A second union election is currently being held at a company warehouse in Staten Island, New York, the same district where workers at a nearby facility voted in favor of unionization in early this month. Amazon has objected to the National Labor Relations Board election and is trying to vote again.
The end result of a separate union elections in Bessemer, Alabama, it is still up in the air with 416 contested ballots pending. Ballot review hearings are expected to begin in the coming weeks.
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