Tuesday, July 5, 2022

Amazon stock drops due to revenue miss and growing costs

It’s difficult to feel sorry for a firm with a market capitalization of about $1.75 trillion, so we won’t. However, in after-hours trading this afternoon, stockholders of Amazon stock are suffering a small hit in the stock market. Amazon released its third-quarter fiscal year 2021 results today after the close of the market. It’s describing the company’s recent performance, which includes a top-to-bottom shortfall on revenues and profitability.

The e-commerce and cloud computing behemoth generated $110.8 billion in revenue in the three months ending September 30, 2021, representing a 15% increase over the same time the previous year, according to the company. Amazon also announced a net profit of $3.2 billion, or $6.12 per share, for the period under review.

Analysts had predicted that the firm would generate results of $111.6 billion and earnings per share of $8.92. Instead, the company posted revenues of $111.6 billion and earnings per share of $8.92. In the most recent fiscal year, the company’s net income decreased by around 49% compared to the previous year.

As we write to you this afternoon, Amazon stock has fallen by a little more than 5 percent.

Amazon’s Third-Quarter Performance

However, while Amazon’s third-quarter performance fell short of expectations, the company’s AWS subsidiary did post increasing revenue growth on a year-over-year basis, giving the company’s followers something to cheer about, the company’s Q4 results may overshadow the company’s previous performances.

While dealing with labour supply shortages, rising wages, global supply chain issues, and rising freight and shipping costs. We expect to incur several billion dollars in additional costs in our Consumer business during the fourth quarter. We will do whatever it takes to keep our customers and sales partners as happy as possible during the holiday shopping season.

A customer-forward approach has used by the CEO to describe the impending costs, stating that taking short-term hits in exchange for longer-term gains is acceptable. Investors have not sufficiently satisfied with the promise of future cash flows to prevent the company’s market capitalization from declining by a few dozen billion dollars.

However, as we have stated, it’s difficult to feel sorry for the company given that it generated net profits of more than $1 billion each month in the third quarter.

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