Amazon stocks dwindle on bleak Q1 results

Shares of Amazon.com, Inc. edged down in extended trading on Thursday after the company issued disappointing first-quarter results.

The world’s biggest online retailer plunged 8.99% or 259.94 points to $2,631.99 per share. It negatively moved from an upswing of 4.65% or 128.59 points to $2,891.93 per share in the regular hours market. Accordingly, the slump dragged $132.69 billion to the firm’s valuation.

Amazon’s Q1 revenue increased 7.00% year-over-year to $116.40 billion. This figure is slightly above the analysts’ consensus of $116.30 billion.

However, it marked the slowest growth rate for any quarter since the dot-com bust in 2001. In the year-ago period, the platform reported a 44.00% expansion.

Consequently, the tech firm posted adjusted earnings of $7.38 per share, below the $8.36 expected.

Moreover, the firm’s advertising segment came in at $7.88 billion, missing the market’s estimate of $8.17 billion.

After a long-running sales surge during the pandemic, Amazon currently faces many challenges. For example, its expenses swelled as it offered higher wages to attract workers.

Then, a fulfillment center in New York City voted to form the firm’s first US union, a move contested by the retailer.

At the same time, the mounting fuel prices risk diminishing consumers’ disposable income. In addition, sky-tall energy costs make delivery more expensive for the company.

The firm recorded a $7.60 billion loss on its Rivian investment. Its shares in the electric vehicle company lost more than half its value in the quarter. As a result, the business resulted in a total net loss of $3.80 billion.

Meanwhile, Amazon Web Services reported an annual gain of 37.00% to $18.40 billion in its revenue. It surpassed the projected sales of $18.27 billion.

Soaring inflation hit Amazon

Amazon’s latest earnings results called consumer demand into question. Subsequently, online store sales ticked lower, and the number of products the platform sold was flat in the first quarter.

The e-commerce giant cited about $6.00 billion in higher costs from a year earlier. This inflated expense includes $2.00 billion of inflationary pressures.

In addition, Russia’s invasion of Ukraine has contributed to higher prices.

In line with this, the second-quarter forecasts suggest growth could drop even further. The company anticipates the rate between 3.00% and 7.00% from a year earlier.

Then, the retailer mentioned it projects revenue this quarter of $116.00 billion to $121.00 billion. This outlook missed the $125.50 billion average analysts’ expectation.

This guidance also mirrors broader industry challenges. For instance, Amazon’s partner United Parcel Service Inc. mentioned it expects e-commerce delivery growth to slow in the current quarter.