new York Investors didn’t expect that: Amazon made a loss of $3.8 billion in the first quarter of the year. The reason for this was the weakening online trade, above all, the write-down on the participation in Rivian, which hit the books with 7.6 billion dollars. The e-car manufacturer’s shares lost massively in value in the first quarter.
The figures published after the close of trading caused the share price to fall by more than ten percent after the stock had previously gained 4.6 percent.
It’s primarily the disappointing outlook that has investors concerned. Amazon warns inflation will continue to weigh on the company. Inflation cost an additional $2 billion in the first quarter, CFO Brian Olsavsky said. And inflationary pressures will not fall anytime soon.
Without the write-down on Rivian, the result would have been in the black, but significantly lower than a year ago: In the first quarter, operating profit fell to $ 3.7 billion after $ 8.9 billion in the same period last year, the group said on Thursday communicate. Currency-adjusted sales, on the other hand, increased nine percent to $116.4 billion.
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AWS makes up for the loss in online trading
Classic online trading made losses in the first quarter, which could only be offset by the increasingly important cloud business of Amazon Web Services (AWS).
For some time now, the online retailer has been changing more and more into a technology, advertising and platform company. Amazon now makes most of its money with the Amazon Web Services (AWS) cloud business and advertising.
The fact that Amazon founder Jeff Bezos chose former AWS boss Andy Jassy as his successor in the group’s CEO position clearly shows the importance of the division. In the first quarter, AWS contributed just under 16 percent to sales at $18.4 billion. But with a profit of $6.5 billion, the division was able to offset the losses in the other business.
Last year, the cloud division generated more than three-quarters of profits for the full year, even though it brought in only 13 percent of sales at $62.2 billion. The important advertising business, which Amazon has only been reporting individually since this year, increased currency-adjusted sales in the first quarter by a quarter to $7.9 billion.
Cautious outlook
For the current quarter, Amazon is reluctant in view of the global economic slowdown and fierce competition in the increasingly important cloud business (AWS) and assumes revenues of between 116 and 121 billion dollars.
Recently, Amazon had also felt headwind from its own employees. For example, at a warehouse in New York’s Staten Island neighborhood, workers voted to form a union for the first time in Amazon’s history.
And recently there has also been resistance to payment among office workers. In February, Amazon raised the maximum fixed salary for its tech and administrative staff from $160,000 to $350,000 per year in the face of a stricken job market and high inflation.
Despite the recent setbacks, Tim Seymor from Seymour Asset Management believes in the stock in the medium term: “I believe that Amazon will remain a beast,” he said on the US television channel CNBS. But investors would have to get used to the fact that growth rates can no longer be as high as they were during the pandemic.
Amazon will be hit harder by the economy than other tech companies, agrees Loup Funds’ Gene Munster. However, he expects the shares to return in the coming year.
More: Microsoft continues to benefit from its Azure cloud technology. However, investors were initially spooked by the figures presented.