Amazon shares crash after disappointing Q3 results
Amazon's profit engine Amazon Web Services (AWS) slowed last quarter, disappointing investors who then sent shares down more than 20% after hours Thursday.
Why it matters: The results come as Amazon's core e-commerce unit is softening as well — a downshift that began when people began to spend more time and money outside their homes.
Details: Amazon's cloud-computing business brought in $20.5 billion in revenue last quarter compared to Wall Street expectations of $21.1 billion, CNBC reported.
- Revenue growth slowed to 27% in the third quarter from 33% in the second quarter.
- AWS made up for all of Amazon's profit.
- Amazon said on Thursday that it also expects its all-important holiday quarter to be weaker than expected.
The big picture: Several Big Tech companies including Meta, Google parent company Alphabet and Amazon's cloud competitor Microsoft this week reported weaker than expected forecasts.
- From shutting down products and ending leases, to hiring freezes and layoffs, executives across the sector are trimming fat as a result.
What they're saying: "Our results were also negatively impacted by non-recurring charges related to the closure of certain businesses ... such as Amazon Care, Fabric.com and Amazon Explore," CFO Brian Olsavsky said on the company's earnings call.
- "We aim to strike the right balance between investing for our customers for the long term, while driving operational efficiency improvements and accomplishing more with less."
Of note: Amazon's big and costly push into sports streaming with NFL Thursday Night Football and original content with "Lord of the Rings: The Rings of Power" show drove record levels of Prime membership signups, Olsavsky noted.
- Yes, but: Marketing and production costs related to the two debuts last month impacted the company's operating income, he said.
- Be smart: Amazon's Prime program is critical to its growth as Prime customers tend to spend multiples more than non-Prime members per year.
What to watch: "We're ... very optimistic about the fourth quarter," said Olsavsky.
- "We're just realistic about whether we may have a range of outcomes that we just have to be ready for — [and] we are."
This story has been updated to reflect Amazon's comments on this afternoon's earnings call.