Amazon stock fell, as the company announced losses estimated at 4 billion dollars

CNN Business
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Amazon stock fell after the company reported slower growth in the last quarter and offered a disappointing revenue outlook.

The tech giant said revenue grew 7% from the same period last year to $116.4 billion, slightly beating analyst expectations but slower than the 9% growth in the final months of last year. The company has forecast revenue growth to slow further in the next quarter, and expects a growth rate of between 3% and 7%.

Amazon posted a net loss of $3.8 billion for the quarter ended March 31, down sharply from the same period last year, when it posted a profit of $8.1 billion. It was also a big mistake from the $4.4 billion earnings that analysts had expected in a Refinitiv poll.

The company attributed the loss largely to a $7.6 billion loss from its investment in electric car company Rivian Automotive. Rivian, which Amazon Led an investment of 700 million dollars In 2019, its stock has fallen more than 75% since its inception November 2021 IPO.

Amazon’s loss came the day after Ford

(F)another early investor in Rivian, I incurred $5.4 billion in pre-tax fees related to this investmentresulting in Ford

(F) It posted a $3.1 billion net loss for the first quarter.

Excluding Rivian’s loss, Amazon would have posted a profit of $3.8 billion, which would still have fallen short of analyst expectations, according to Refinitiv.

Amazon

(AMZN) Shares fell about 10% in after-hours trading following the results.

“The pandemic and subsequent war in Ukraine have brought extraordinary growth and challenges,” Andy Gacy, Amazon CEO, said in a statement.

Gacy noted Amazon’s rapid growth in its consumer business during the pandemic, and the “doubling” of the company’s order fulfillment network in the past two years.

“Today, because we no longer chase physical capabilities or employees, our teams are directly focused on improving productivity and cost effectiveness across our fulfillment network,” he added. “This may take some time, particularly as we work through ongoing inflationary pressures and the supply chain, but we are seeing encouraging progress in a number of customer experience dimensions.”

The company also announced that Prime Day, its annual sales miner, will take place in July in more than 20 countries.

On an earnings call, Amazon Chief Financial Officer Brian Olsavsky said high inflation, fuel prices and labor restrictions added $2 billion to costs compared to last year.

“The cost of shipping a container abroad has more than doubled compared to pre-pandemic rates,” he said. “The cost of fuel is about one and a half times higher than it was a year ago.”

Olsavsky said the rise of the Omicron variant at the end of 2021 led to a “significant increase” in employees going on vacation, prompting Amazon to ramp up hiring to make up for absences. But with workers returning when the variables subsided, “we moved quickly from understaffing to overstaffing,” he added. This led to a “low productivity,” he said, adding another $2 billion in costs.

Amazon’s earnings come in a dent as the company continues to face pressure from warehouse employees over issues such as wages and working conditions. Workers at a Staten Island warehouse in New York voted to form the e-commerce giant The first American labor union advance this month. Since then Amazon File an appealcalling for the entire vote to be postponed.

A separate Amazon Consortium election in Bessemer, Alabama also recently concluded and the results are too close to predict.

The union effort grew out of worker frustration with Amazon’s treatment of workers amid the pandemic and was also driven by increased national interest in issues of racial justice and workers’ rights.

Amazon later announced that it will conduct a Racial Justice Audit Led by former US Attorney Loretta Lynch.