Tech giant Amazon sees a 10% shares drop in its first loss since 2015

upland-software-buys-bluevenn-for-52mn-to-boost-customer-engagement

Amazon, the renowned American technology company, has reportedly announced its first loss since 2015 on Thursday, as sales stagnated, costs soared, and profits wiped out by its stake in electric vehicle firm Rivian.

Amazon's shares dropped 10% in after-hours trading as a result of the announcement.

Amazon's first-quarter revenue climbed at a sluggish 7% to $116.4 billion, the company's weakest growth pace in over two decades. Amazon's sales surged 44% to $108.5 billion in the same period last year. In other words, it incurred a loss of $3.8 billion in this quarter, as compared to the $8.1 billion profit it had brought in for the same period a year ago.

According to the company, more losses are likely to be reported in coming times. Amazon forecasts operating income to range between a loss of $1 billion and a profit of $3 billion in the present quarter, compared to $7.7 billion profit it recorded in the second quarter of last year.

The loss was partly due to Amazon's investment in Rivian, an electric vehicle firm. Amazon controlled a nearly 20% stake in the firm and suffered a loss of $7.6 billion when shares in the EV plummeted by over 50%.

Andy Jassy, Amazon’s CEO, stated that the COVID-19 outbreak and the war that followed in Ukraine have brought unprecedented growth and challenges.

Brian Olsavsky, Amazon's chief financial officer, stated that inflationary prices, storage capacity surpassing demand, as well as other factors cost the firm around $6 billion in the first quarter.

Amazon was one of the pandemic's major winners, with enormous sales increases as consumers shifted to online shopping and businesses resorted to Amazon Web Services (AWS), the company's cloud computing arm, to conduct their operations. AWS experienced a 37% increase in sales over the quarter.

However, as Covid-19 vaccination rates rise and hospitalizations reduce, shoppers are once again returning to bricks and mortar stores. According to sources, in-store shopping increased by 11.2% in March, while online purchases decreased by 3.3%.

The e-commerce giant is facing additional issues from employees all over the US, who are pushing to unionize and bargain for higher salaries, improved working conditions, as well as added benefits.

Source credit: https://www.theguardian.com/technology/2022/apr/28/amazon-revenue-loss-shares-drop