Amazon.com Inc. reported a loss of nearly $4 billion in the first quarter of 2022, as its investment in Rivian Automotive Inc. wiped away all of its profit and more, and delivered a disappointing forecast Thursday, sending shares down in late trading.
Amazon
AMZN,
reported a first-quarter loss of $3.8 billion, or $7.56 a share, after the e-commerce giant reported earnings of $15.79 a share a year ago. It is the first quarterly net loss for Amazon in exactly seven years, since the same period in 2015. Revenue increased to $116.44 billion from $108.52 billion in the same period a year ago. Analysts on average expected earnings of $8.35 a share on sales of $116.45 billion, according to FactSet.
Amazon’s earnings were damaged by the same dynamic that helped the company at the end of 2021: The performance of Rivian stock
RIVN,
Rivian’s initial public offering added $11.8 billion to Amazon’s bottom line in the fourth quarter, but the stock dropped more than 50% in the first quarter and wiped away $7.6 billion from first-quarter profit. Without that cost, Amazon still would have come in under analyst estimates — net income would have been roughly $4 billion, while analysts were expecting $4.47 billion, and operating income (which does not count the Rivian decline) was $3.67 billion, while analysts on average were projecting $5.32 billion, according to FactSet.
Amazon shares fell more than 10% in after-hours trading immediately following the release of the report, after closing with a 5.1% gain at $2,891.93. The stock has held up better than most so far this year, declining 13.3%, nearly in-line with a 12.2% decline by the S&P 500 index
SPX,
in 2022.
“The pandemic and subsequent war in Ukraine have brought unusual growth and challenges,” Chief Executive Andy Jassy said in a statement included with the results Thursday.
Jassy noted that Amazon will look to be more efficient after an operating loss of more than $2.8 billion in its e-commerce business during the quarter, but that the efforts are not expected to pay off right away.
“Today, as we’re no longer chasing physical or staffing capacity, our teams are squarely focused on improving productivity and cost efficiencies throughout our fulfillment network. We know how to do this and have done it before,” he said in the statement. “This may take some time, particularly as we work through ongoing inflationary and supply chain pressures, but we see encouraging progress on a number of customer experience dimensions.”
Amazon’s cloud-computing division — Amazon Web Services, or AWS — counteracted the Rivian effect and e-commerce losses, continuing to be the biggest driver of profit for Amazon. Amazon reported AWS operating profit of $6.52 billion on revenue of $18.44 billion; analysts on average were expecting AWS sales of $18.34 billion, according to FactSet.
Amazon’s e-commerce business continued to report losses, with an operating loss of $1.57 billion on sales of $69.24 billion in North America, and an operating loss of $1.28 billion on sales of $28.76 billion internationally.
For the second quarter, Amazon executives guided for an operating loss of $1 billion to a profit of $3 billion on net revenue of $116 billion to $121 billion. Analysts on average were expecting operating income of $6.78 billion on revenue of $125.33 billion heading into the report, according to FactSet. Amazon announced that its annual Prime Day sale will be in July, the third quarter, as some analysts expected; other analysts projecting a second-quarter Prime Day could be a factor in the shortfall.
George is Digismak’s reported cum editor with 13 years of experience in Journalism