Amazon's shares plummeted after the business revealed a substantial loss in the first three months of the year.
The computer behemoth reported a $3.8 billion net loss for the quarter ending March 31, a significant decline in revenue from the same time the previous year, when it earned $8.1 billion. It was also a far cry from the $4.4 billion profit expected by analysts polled by Refinitiv.
The business ascribed the loss to a $7.6 billion loss from its investment in Rivian Automotive, an electric vehicle manufacturer. Rivian's shares have dropped more than 75 percent since its big November 2021 IPO, in which Amazon led a $700 million investment.
Following the findings, Amazon (AMZN) stock dropped approximately 10% in after-hours trade.
In a statement, Amazon CEO Andy Jassy stated, "The epidemic and ensuing conflict in Ukraine have brought unexpected growth and difficulties."
Amazon's overall sales increased 7% year over year to $116.4 billion, slightly surpassing analyst expectations but falling short of the 9 percent growth seen in the latter months of last year. The business expects sales growth to decrease even further in the coming quarter, with a pace of between 3% and 7% expected.
During the pandemic, Jassy mentioned Amazon's rapid growth in the consumer business, as well as the "doubling" of the company's fulfillment network in the last two years.
"Now that we aren't pursuing physical or personnel capacity, our teams are solely focused on increasing productivity and cost-efficiency across our fulfillment network," he said.
"While we are working through continued inflationary and supply chain constraints, we are seeing positive improvement on a number of customer experience measures."
Prime Day, Amazon's annual sales frenzy, will take place in more than 20 countries in July, according to the firm.
Amazon's chief financial officer, Brian Olsavsky, said on an earnings call that increased inflation, gasoline prices, and labor shortages added $2 billion to costs compared to the previous year.
"In comparison to pre-pandemic prices, the cost of shipping an overseas container has more than doubled," he stated. "Fuel prices are around one-and-a-half times higher than they were merely a year ago."
According to Olsavsky, the emergence of the Omicron version towards the end of 2021 resulted in "a significant surge" in employees taking leave, causing Amazon to expand recruiting to compensate for the absences. "We swiftly moved from being understaffed to being overstaffed," he noted when workers returned as the variants subsided. According to him, this resulted in "reduced productivity," resulting in an additional $2 billion in expenditures.
Amazon's profits decline comes as the business continues to face criticism from warehouse workers over wages and working conditions. Workers at an Amazon facility on Staten Island, New York, voted earlier this month to create the company's first-ever US labor union. Amazon has subsequently filed an appeal, requesting that the entire vote be redone.
A separate Amazon union election was recently held in Bessemer, Alabama, with results that were too close to call.
Both union movements were driven in part by rising national attention to racial justice concerns and labor rights, as well as worker discontent with Amazon's handling of employees during the epidemic.
Following that, Amazon said that it will perform a racial equity audit overseen by Loretta Lynch, the former US Attorney General.
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