Amazon significantly missed Wall Street earnings forecasts for the first quarter of 2022, as the world’s largest online retailer saw a significant slowdown in top-line growth and faced higher costs in the period.
Overall, the company reported revenue of $116.4 billion, up 7%, in line with expectations — but Amazon’s slowest year-over-year growth rate in two decades. Amazon reported a net loss of $3.8 billion in the first quarter, or – $7.56 per diluted share. The first-quarter net loss included a pre-tax valuation loss of $7.6 billion included in non-operating expenses from its equity investment in electric vehicle manufacturer Rivian.
E-commerce company Kingpin’s advertising services sales reached $7.88 billion, up 25% year-on-year, but analysts expected a rise in sales. The company achieved advertising revenue for the first time with its fourth-quarter results. Segment includes sales of advertising services to sellers, sellers, publishers, authors, and others through sponsored ads, display ads, and video.
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According to Refinitiv, analysts estimated revenue of $116.3 billion and earnings per share of $8.36. Wall Street was looking for $8.17 billion in ad sales, according to StreetAccount.
“The pandemic and subsequent war in Ukraine have brought extraordinary growth and challenges,” Andy Gacy, Amazon CEO, said in a statement. He noted that the company’s consumer business has grown 23% annually over the past two years, pointing to tough year-over-year comparisons.
“Today, because we are no longer chasing physical capabilities or personnel, our teams are focused squarely on improving productivity and cost effectiveness throughout our fulfillment network,” Gacy said, adding that “this may take some time, particularly as we work through inflation pressures.” and supply chain.”
In February, Amazon announced it was raising prices for its Prime membership program in the US, from $119 to $139 a year (up 17%), citing benefits including increased investment in “quality digital entertainment.” That, according to the company, included three times as many TV shows and movies as Prime Video since 2018 as well as higher wages and transportation costs.
In its earnings announcement, Amazon indicated that during the first quarter it closed an $8.5 billion acquisition of MGM, bringing its catalog of more than 4,000 movie titles and 17,000 TV episodes, including franchises like James Bond, Rocky, and Legally Blonde. This week, two of MGM’s top film directors resigned: Michael De Luca, president of the Motion Picture Group, and Pamela Abdi, head of the Motion Picture Group.
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