Amazon shares drop after sales, forecast fall short
Amazon.com Inc. reported sales that missed analysts’ estimates and issued a disappointing revenue forecast for the busy holiday quarter, suggesting the online marketplace may be reaching a saturation point in the United States.
Revenue climbed 29% to $56.6 billion in the third quarter, the e-commerce giant said Thursday. Analysts had projected $57.1 billion. Amazon forecast sales of $66.5 billion to $72.5 billion in the current period, falling short of analysts’ average estimate of $73.8 billion.
Profit jumped, however. Amazon reported net income of $2.88 billion, or $5.75 a share, in the third quarter — up from $256 million, or 52 cents, in the same quarter last year, beating analysts’ expectation of $3.11 a share.
Amazon issued its report Thursday after markets closed. Its stock declined as much as 6.5% in after-hours trading.
U.S. shoppers are projected to increase their online spending by as much as 22% this holiday season, according to Deloitte Insights. Amazon is poised to benefit from that shift, capturing almost half of U.S. online sales, according to EMarketer Inc. Although Amazon has dominated e-commerce in the United States, it faces steppedup competition from rivals such as Walmart Inc.
The company showed slowing revenue growth in all categories quarter over quarter, including online sales and subscription sales, Amazon Web Services sales and its fast-growing advertising business. Amazon has relied on growth in the ranks of its Prime members, estimated at about 97 million in the United States, who pay fees in exchange for shipping discounts, streaming video and other services.
Amazon’s stock had risen about 50% this year, as investors bet on the Seattle company’s continued dominance and its expansion into new areas.
The shares have dropped about 15% from their September high amid a broader market downturn and closed Thursday up 7.1% to $1,782.17 before the results were released.
Chief Executive Jeff Bezos spends heavily to keep ahead. Amazon has been building warehouses and data centers around the world, inventing devices and trying to reimagine the convenience-store experience.