Amazon’s Shares Plunge as Sales, Profit Miss Wall Street Estimates

3392813959_1ed8265fea_bAmazon's holiday quarter profit missed Wall Street's estimates by a wide margin as the world's No. 1 online retailer faced rising operating costs and growth slowed in its cloud services business.

Its shares plunged 12 percent after hours on Thursday, after its quarterly report, following a 9 percent increase in regular trading.

Fourth-quarter net profit rose to $482 million, or $1.00 per share, in the quarter ended Dec. 31 - marking its largest quarterly profit on record - up from $214 million, or 45 cents per share, a year earlier.

That was well below analysts' average forecast for profit of $1.56 per share, according to Thomson Reuters. It was the first time Amazon has reported three consecutive profitable quarters since 2012.

  • Net sales rose 21.8 percent $35.75 billion, but missed analysts' expectations of $35.93 billion.
  • Net sales from its cloud services business, Amazon Web Services, rose 69.4 percent to $2.41 billion, compared with a growth of more than 78 percent in the third quarter.
  • Amazon's net sales in North America increased 24 percent to $21.5 billion.
  • The company's total operating expenses surged more than 20 percent to $34.64 billion in the fourth quarter.

Amazon has been spending on rolling out several new services for members of its $99-a-year Prime loyalty program, including one-hour delivery and original TV programming, to attract customers in a highly competitive online shopping market.

Amazon dominates the worldwide retail e-commerce market, which according to eMarketer totaled $1.67 trillion last year and is expected to grow by 22 percent this year.

Amazon’s Prime program is estimated by some analysts to have around 50 million members worldwide. In a decade since its launch, Prime has become an engine of growth for Amazon and an important testing ground for new offerings like one hour delivery and ambitious original TV programming.

(Reporting by Arathy S Nair in Bengaluru; Editing by Kirti Pandey, Stephen R. Trousdale and Bill Rigby)

image by DaveFayram

4 Comments on Amazon’s Shares Plunge as Sales, Profit Miss Wall Street Estimates

  1. Tough crowd.

  2. I love how the analysis’ can set expectations and then if you miss them it’s your fault. Like those guys actually work for a living. I’m so glad that Bezos ignores them for the most part. I see from the above that they had growth in all sectors and that’s just not enough for wall street.

  3. Uh Oh, Spaghetti Os!
    921 PE Ratio
    Amazon only exists to put other companies out of business, not to make a profit that in any way justifies its large – humongous – capital allocation.
    But it surely would have allowed the USSR to continue for a few more years had it been around in the ’80s.
    Amazon could end up as the little shop of horrors.
    https://www.youtube.com/watch?v=jFENSU8CmZk

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