Weak Amazon earnings spook market
Amazon reported a weak first quarter Thursday with an overall loss of $3.8 billion thanks to excess capacity, higher shipping costs, and a $7.6B write-down of the firm's investment in electric-vehicle maker Rivian.
Driving the news: Amazon continues to grow, but the reported loss, along with a pessimistic forecast for revenue growth next quarter, drove shares down about 10% in after-hours trading.
Details: On its earnings call, the company reported it had expanded fulfillment capacity during the early pandemic, leaving it with an excess today that cost about $2 billion for the quarter. Those losses will continue until future growth absorbs that capacity.
- Amazon Web Services, the company's hugely successful cloud business, was a bright spot, with sales up 36.5% from the same quarter a year ago to $18.44B.
Of note: The company said a length labor shortage precipitated by the pandemic had eased. It also faces pressure from a burgeoning unionization drive among warehouse employees.