Amazon Shares Plummet After First-Quarter Revenue Falls Short Of Expectations

Amazon’s slowing growth and heavier investments in 2019 dragged their shares down in after hours trading.Its shares dropped more than 5 percent in extended trading after the company warned of increased spending this year, following a relatively slow investment period in 2018.

The better-than-expected fourth-quarter results, backed by strong holiday sales, comes as investors fret about decelerating growth following two straight quarters of disappointing revenue. Sales climbed 19.7 percent in the latest quarter, which was faster than the 18.8 percent expected, but still the slowest since the first quarter of 2015.International sales growth also slowed to 15 percent compared to the previous year’s 29 percent growth rate.

The company said that it expects revenue to come in between $56 billion and $60 billion in 2019 slightly below the $60.8 billion consensus estimated by FactSet.Amazon’s “Other” segment, mostly comprised of its advertising business, jumped 95 percent to $3.4 billion in revenue.

Amazon generated $3 billion in net income, up 66 percent from last year. In addition to cloud, Amazon is getting a profit boost from advertising and the third-party marketplace, where margins are bigger but sales are smaller. Amazon is historically known for running on thin margins because it reinvests most of its profits back into the company.

Amazon finished the year with $232.9 billion in annual revenue passing the $200 billion milestone for the first time.CEO Jeff Bezos credited the success of the Alexa voice-assistant in its earnings release.Amazon stock has gone up 18 percent over the past year. Amazon is the largest of any publicly traded company in the world.

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