Amazon shares drop in earnings report

Amazon shares sank Friday, after a first-quarter earnings report that showed a massive loss, exacerbated by revenue expectations that were well below expectations. Amazon (AMZN) blamed the pandemic, inflation and Russia’s invasion of Ukraine for its poor outlook, among other things.

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First-quarter results came out late Thursday. For the second quarter ending in June, Amazon expects revenue in the range of $116 billion to $121 billion. The mid-range of $118.5 billion is below analyst estimates of $125.3 billion. Amazon now expects an operating loss of $1 billion to $3 billion, compared to a loss of $7.7 billion in the quarter last year.

Amazon stock fell 10.5% to 2586.50, during the morning’s move on stock market today.

“The pandemic and subsequent war in Ukraine have brought extraordinary growth and challenges,” said CEO Andy Gacy. Amazon earnings release.

The e-commerce giant also said its first-quarter net loss included a pre-tax valuation shortfall of $7.6 billion from its investment in common stock in the electric car maker. Rivian Cars (countryside) which lost about half its value in the quarter.

How Rivian Investment Impacted Amazon Results

As a result, Amazon reported an adjusted loss of $7.56 per share on revenue of $116.4 billion. Analysts had expected Amazon to report earnings of $8.35 per share on revenue of $116.5 billion, according to FactSet, but that clearly did not include Rivian’s loss.

If the loss of $7.6 billion from Amazon’s investment in Rivian had not been included, Amazon’s net income would have been around $4 billion, while analysts had expected $4.47 billion.

Its operating income, which does not include Rivian, was $3.67 billion, while analysts had expected $5.32 billion, according to FactSet. Revenue grew 7% over the same period last year.

Amazon stock: Expect operating loss

Amazon Web Services reported revenue of $18.44 billion, well above estimates of $18.27 billion. Advertising revenue from $7.88 billion was lower than the estimate of $8.17 billion.

In mid-April, Amazon announced a 20-for-1 stock split that is scheduled sometime in early June. It plans to make its shares more accessible to retail traders.

Amazon said the plan also gives employees more flexibility in how they manage their stock in advertising. The company also put in place a $10 billion Amazon stock buyback plan.

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