Amazon shares plunge as worries about rising costs and lower demand as COVID subsides | business news

Amazon shares took a 10% hit after the streaming e-commerce platform giant admitted it was struggling under a cost weight that would hurt its performance.

The company’s first-quarter results included its first quarterly loss since 2015, although the $3.8bn loss was attributed to a $7.6bn write-down in the value of its investment in the Rivian electric vehicle startup.

However, the red ink was overshadowed by his forecasts showing that the wave Amazon I had traveled well during the COVID crisis to date it had well and truly dissipated.

It expected to lose up to $1 billion in operating income between April and June, or gain up to $3 billion.

Either sum is far short of an operating profit of $7.7 billion in the same period last year when the company was profiting from pandemic-concerned consumers shopping from the comfort of their homes and enjoying the added perks. of your Prime memberships.

Amazon noted a slowdown in demand for online shopping at a time of rising costs, mainly related to energy.

Image:
Higher fuel bills are among the extra costs Amazon has to absorb

Headwinds are also related to global supply chain disruption and labor shortages, as the company has had to offer more money to attract staff.

It has tried to offset these additional costs by increasing its Prime membership fees and has also added a 5% surcharge to the fees it charges third-party sellers using its fulfillment services.

However, its operating profit projections suggest that the stock will not be enough to offset rising bills at a time when consumer demand is also facing pressure from higher inflation, at its highest point in 40 years in its main US market.

First-quarter revenue missed estimates, coming in at $116.4 billion, up 7% from the same period in 2021.

Amazon CEO Andy Jassy said the company had finally met its needs for warehouse capacity and staffing, but still had work to do to improve productivity at a time when it faces mounting pressure from a workforce demanding union representation.

He said on the subject of productivity: “This may take some time, particularly as we work through ongoing supply chain and inflationary pressures, but we see encouraging progress across a number of customer experience dimensions, including delivery speed performance as we approach levels not seen since the months immediately preceding the pandemic in early 2020.”

Add Comment