Amazon on Thursday reported its first quarterly loss since 2015, its gargantuan profitability crippled by a pandemic-induced slowdown in online shopping and a large reduction in its investment in an electric vehicle startup.
Shares in the Seattle-based e-commerce giant nearly 10% in after-hours trading.
Amazon posted a loss of $3.84 billion, or $7.56 a share, in the first three months of the year. A year ago, the company posted earnings of $8.1 billion, or $15.79 a share, in the first quarter. Wall Street analysts had expected earnings of $8.35 a share in the last quarter, according to FactSet.
The ocean of red ink in Amazon’s report came from the company’s accounting for a $7.6 billion loss in the value of its equity investment in Rivian Automotive.
Still, the slowdown in online spending is real and widespread. While in-store sales have increased, March is the first month to show a decline in online sales since the start of the pandemic, according to Mastercard SpendingPulse, which tracks spending on the Mastercard payment network and researches estimates for other payments made with cash and checks. .
Amazon has thrived during the COVID-19 pandemic as homeless people, eager to limit human contact, have turned online to buy what they need. 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 grew by half compared to 2020.
“Given the pace at which the business has grown in recent years, this shift is not surprising, so it represents more of a post-pandemic reset than a catastrophic failure,” Neil Saunders, managing director at consultancy GlobalData, said in an email. .
Like many others, Amazon is dealing with the pressure of inflation, supply chain problems and labor shortages. Last quarter, the company increased its annual Prime membership fee by $20, the first since 2018. To offset rising fuel costs and inflation, the company also added a 5% surcharge to fees charged to third-party sellers. who use their customer service.
“The problem for Amazon is that while sales growth has moderated, cost growth has not,” Saunders said. “Compared to last year, cost of sales has increased by 63% and fulfillment expenses have increased by 46%. Other expenses have also increased sharply. Simply put, Amazon’s cost of operation – which was already hefty – is becoming dramatically more expensive. .”
Revenue increased 7% to $116.44 billion compared to $108.52 billion in the first quarter of 2021, representing the company’s sixth consecutive quarter of revenue topping $100 billion. Amazon had projected sales between $112 billion and $117 billion. Analysts polled by FactSet had expected $116.5 billion.
The results come at a time when the company faces afrom within your workforce. A second union election is underway at a company warehouse in Staten Island, New York, the same neighborhood where workers at a nearby facility voted to unionize earlier this month. Amazon has filed objections to the election with the National Labor Relations Board and is trying to redo the vote.
The end result of ain Bessemer, Alabama is still in the air with 416 outstanding ballots hanging in the balance. Hearings to review the ballots are expected to begin in the coming weeks.