Jeffrey Preston Bezos established Amazon from his garage in Bellevue, Washington, on 5th July 1994. Initially, the company started as an online bookselling website. It has since expanded to offer a wide range of products, earning the title of The Everything Store. The company has multiple subsidiaries, including Zoox (autonomous vehicles), Amazon Lab126 (computer hardware R&D), Amazon Web Services (cloud computing), and Kuiper Systems (satellite Internet). Its other subsidiaries include IMDb, Whole Foods Market, Twitch, and Ring.
In addition, Amazon.com, Inc. is one of the big five American Information Technology companies, along with Meta, Microsoft, Apple, and Alphabet. It is an American multinational technology firm that primarily focuses on cloud computing, artificial intelligence, digital streaming, and e-commerce. It is one of the most valuable brands in the world.
Amazon shares fell as much as 10% during the extended-hours trading on Thursday after releasing a revenue forecast below analysts’ expectations.
Here’s how Amazon performed compared to what Wall Street expected.
- Revenue: According to Refinitiv, the company revenue is $116.44 billion vs. $116.3 billion anticipated.
- Earnings: According to Refinitiv, the company earnings are $7.38 per share vs. the $8.36 estimated.
Here is how Amazon’s other key segments performed during the quarter.
- Advertising: According to StreetAccount, the advertising segment is $7.88 billion vs. $8.17 billion anticipated.
- Amazon Web Services: According to StreetAccount, the Amazon Web Services segment is $18.44 billion vs. $18.27 billion estimated.
Amazon lost around $7.6 billion on its Rivian investment after the electric vehicle company’s stock dropped by more than half in the quarter. This resulted in a $3.8 billion total net loss.
Amazon’s revenue grew by 7% over the first quarter compared to a 44% gain over the same period last year. It’s the slowest growth rate since the dot-com bust in 2001 and marks the second consecutive duration of single-digit growth.
The second-quarter forecasts indicate that growth could be even lower, between 3% and 7% from a year ago. Amazon stated that it anticipates revenue of $116 billion to $121 billion this quarter. This is lower than the $125.5 billion average analysts expect, according to Refinitiv.
Like Facebook and Google earlier this week, Amazon.com, Inc. attributed a lot of the slowdown to macroeconomic factors and Russia’s invasion of Ukraine.
Andrew R. Jassy, Amazon CEO, stated that “The pandemic and subsequent conflict in Ukraine have brought unexpected growth and challenges.” He further said that the Amazon firm is “squarely focusing” on balancing costs in its fulfillment network now that warehousing capacity and human resources are at normal levels.
Amazon has been dealing with many economic issues, including higher labor and fuel costs, an ongoing pandemic, rising inflation, and global supply chain problems. The company introduced a 5% surcharge for some U.S. sellers earlier this month to cover some costs. This is the first such charge in Amazon’s history. In addition, the Amazon Company raised the price of its United States Prime membership to $139 from $119 for the first time in four years.
Profits are still suffering. The Amazon Company’s operating margin, or the amount of money left after accounting costs for the business’s operations, declined to 3.2% during the first quarter, down from 8.2% the previous year.
“This may take time due to ongoing inflationary pressures and supply chain pressures; there is encouraging progress in a number of customer experience dimensions, including delivery speed performance, which is now at levels not seen since early 2020, when the pandemic began.” Andrew Jassy stated.
Apple Inc. and Amazon both announced their results on Thursday. They are the latest Big Tech companies to provide investors with an update about their year’s start. It has been a mixed bag so far, with ad-supported companies struggling due to the Russian invasion of Ukraine and macroeconomic factors.
Amazon is the latest company on the list to report disappointing ad revenues. The segment saw a 23% increase in revenue year-over-year, which is faster than its ad peers. Facebook’s advertising revenue increased just 6.1%, which is the lowest expansion in its 10-year history. Google’s advertising revenue rose by 22%, but YouTube’s growth was slowed by 14%, which was lower than projected.
Amazon’s cloud-computing division continues to work well, despite competition from Microsoft and Google. Amazon Web Services’ sales rose 36.5% over a year to $18.44billion, more than the $18.27billion Wall Street had estimated.
Amazon Web Services generated a 57% growth in operating income to $6.5 billion, but Amazon’s total operating income declined to $3.7 billion from $8.9 billion a year earlier.
Amazon Company also confirmed on Thursday that Prime Day would be held in July this year. Amazon’s Prime Day was held in June last year. It is possible that the move of the 2-day discount event to third-quarter could affect year-over-year comparisons for revenue in the 2nd quarter, but it could be beneficial for third-quarter results.
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