Amazon shares were off 10% from their close in the after-hours as the company reported a first quarter loss of $7.56 which missed a consensus expected EPS of $8.40. Net sales met estimates, coming in at $116.4 billion. North America and AWS (cloud computing) were the two bright spots for the top line, while subscription revenue from Amazon Prime, advertising, and online store sales outside of the U.S. were generally lower than expected.
Operating margins are feeling the pressure due to higher inflation, specifically in shipping expenses. Worldwide shipping costs have increased by 14% year over year for the company, due to a sharp rise in fuel and wage expenses. Given that Amazon’s e-commerce business was already a low-margin enterprise, higher expenses are going to be hard to offset going forward.
Furthermore, the company already increased Prime subscription prices and added a fuel surcharge for its third-party online merchants in the first quarter. Despite these developments, the company projected weaker than expected numbers for the third quarter. The company sees 2Q net sales at $119bn at the midpoint, versus an estimate of $125bn.
Additionally, the company projected a second quarter loss as well. On a positive note, Prime Day is expected in the third quarter this year, while the investments Amazon has made into its supply chain could start bearing fruit going into the holiday season. Lastly, despite the large first quarter loss reported by the company, the balance sheet remains solid, with cash topping $36 billion as of quarter end.
Featured CoursesRecent news
SpaceX Stock Climbs 10% on Day Two as Musk Eyes $1 Trillion Revenue by 2030
SpaceX shares continued to surge, rising 10% to $177.13 by midday Monday. This follows a 19% jump on Friday’s debut. The gains are being driven by Elon Musk’s bold revenue forecasts, strong demand in secondary markets, and a broader market rally after news of a U.S.-Iran peace deal. Here’s a look at what’s behind the […]
Nvidia Shares Rise 2.7% as Chip Maker Targets $20B Bond Offering
NVIDIA is entering the debt markets for the first time in five years. Its shares rose 2.7% in early trading on Monday after the company released a prospectus for a multi-part offering of senior unsecured investment-grade notes, marking its first bond deal since 2021. Here’s a look at what this offering involves and what it […]
Roku Shares Rise 2.8% After Fox Agrees to $22B Acquisition Deal
Fox Corp has agreed to buy Roku, a streaming technology company, for $160 per share, which values Roku at about $22 billion. On Monday, Roku shares went up 2.8% in premarket trading, while Fox Class A shares dropped 13%. Roku’s smaller gain comes after its stock jumped 20% on Friday when news of the talks […]
Trade with fewer limits
Day trade with fewer limits at fast speed. Buy stocks and ETFs at low fees.