Amazon stock sank Friday, following its first-quarter earnings report that showed a steep loss, made worse by a revenue prediction well short of expectations. Amazon blamed the pandemic, inflation and Russia's invasion of Ukraine for its weak outlook, among other things.
The first-quarter results came late Thursday. For its second quarter ending in June, Amazon expects revenue in the range of $116 billion to $121 billion. The midrange of $118.5 billion is below analyst estimates of $125.3 billion. Amazon now expects an operating loss of $1 billion to $3 billion, compared with a $7.7 billion loss in the year-ago quarter.
Amazon stock plunged 14%, to 2,485.63, its largest percent decrease since Oct 26, 2011, when it fell 12.66%.
"The pandemic and subsequent war in Ukraine have brought unusual growth and challenges," Chief Executive Andy Jassy said in the Amazon earnings release.
The e-commerce behemoth also said its first-quarter net loss included a pretax valuation deficit of $7.6 billion from its common stock investment in electric-vehicle maker Rivian Automotive, which lost about half its value in the quarter.
How Rivian Investment Affected Amazon Results
As a result, Amazon reported an adjusted loss of $7.56 a share on revenue of $116.4 billion. Analysts were expecting Amazon to report earnings of $8.35 a share on revenue of $116.5 billion, according to FactSet, but that apparently didn't include the Rivian loss.
If the $7.6 billion loss from Amazon's investment in Rivian was not included, Amazon net income would have been about $4 billion, while analysts were expecting $4.47 billion.
Its operating income, which does not count Rivian, was $3.67 billion, while analysts were projecting $5.32 billion, according to FactSet. Revenue grew 7% from the year-ago period.
Amazon Stock: Operating Loss Expected
The company's Amazon Web Services reported revenue of $18.44 billion, above estimates of $18.27 billion. Advertising revenue of $7.88 billion was below estimates of $8.17 billion.
In mid-April Amazon announced a 20-for-1 stock split that is due sometime in early June. It plans to make its shares more accessible for retail traders.
The plan also gives employees more flexibility in how they manage their equity, Amazon said in the announcement. The company also put in place a $10 billion Amazon stock buyback plan.
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