Amazon.com Inc. (AMZN) posted its Q1 2022 earnings results on April 28, 2022. While the earnings were a miss, further disappointment was caused by a bleak outlook for the ongoing quarter. Consequently, the stock after plunging by over 11% initially, closed the late trading session with a loss of 9.02%. Thus, the stock was valued at a price of $2,631.00 in the after-hours which is below its 52-week low of $2,671.45.
The prior session had the stock valued at $2,891.93 after a gain of 4.65% at 5.87 million shares.
AMZN’s March Quarter
For the March quarter, the company reported net sales of $116.4 billion which increased by a mere 7% YOY. Compared to a 44% increase in the year-ago period, this marks the slowest growth rate in over two decades. Moreover, the sales also fell slightly below investors’ expectations of $116.5 billion for the quarter.
A further huge blow was the net loss of $3.8 billion amounting to an adjusted loss of $7.56 a share. The company said this loss came from its stake in the automaker Rivian. The company’s investment in Rivian resulted in a $7.6 billion loss for AMZN as Rivian shares fell by over 50%. Excluding the loss associated with Rivian, the company’s net income would still have been short of the expected. Analysts were expecting a net income of $4.47 billion for the quarter.
Furthermore, the company’s operating income which does not include Rivian costs was $3.67 billion against the expected $5.32 billion.
The only segment of the company that remained profitable in the quarter was Amazon Web Services which grew by 37%.
According to the company, the pandemic and Russia-Ukraine crisis on top of inflationary pressure are the cause of the measly financials and bleak outlook.
For the current quarter, AMZN expects revenue of $116-$121 billion, well below analysts’ estimates of $125.3 billion.
On top of the geopolitical crisis, the company is grappling with rising fuel costs and shipping charges as well as higher wages. Supply chain constraints are also persisting due to Covid-19 related lockdowns in China.
Even if the geopolitical crisis were averted and the supply chain re-established, questions have still been rising over the suitability of the online shopping boom as economies continue to reopen. Thus, with online shopping consolidating, and the current crisis continuing, AMZN will have to take drastic measures to ensure sustained growth.