Amazon reported a significant loss in the first three months of the year, sending the company’s stock plunging.
The tech giant said on Thursday it posted a net loss of $3.8 billion in the quarter ended March 31, a sharp drop in earnings year-over-year when it made $8.1 billion. That’s also a big shortcoming from the $4.4 billion profit that analysts surveyed by Refinitiv had forecast.
The company attributed the loss mainly to a $7.6 billion loss from an investment in electric car maker Rivian Automotive. Rivian, for which Amazon led a $700 million investment in 2019, has seen its stock plummet more than 75% since its IPO in November 2021.
Amazon’s loss comes a day after Ford, another early investor in Rivian, incurred a $5.4 billion pre-tax charge related to that investment, resulting in Ford reporting a net loss of 3 $1.1 billion in the first quarter.
Amazon shares fell about 10% in after-hours trading following the results.
“The pandemic and the ensuing war in Ukraine have brought extraordinary growth and many challenges,” Amazon CEO Andy Jassy said in a statement.
Amazon’s overall revenue rose 7% year-over-year to $116.4 billion, slightly beating analysts’ forecasts but slower than the 9% growth in the final months of last year. The company forecasts revenue growth to slow further next quarter, predicting a growth rate of between 3% and 7%.
Jassy mentioned Amazon’s dizzying growth in its consumer business during the pandemic and the “doubling” of the company’s fulfillment network over the past two years.
“Today, when we are no longer chasing physical or human capacity, our teams focus on improving productivity and cost effectiveness across our entire fulfillment network,” he said. said more. “This may take some time, especially as we face ongoing inflationary pressures and supply chain pressures, but we see encouraging progress on several fronts.” the customer experience edge.”
The company also announced that Prime Day, its annual supermarket sale, will take place this July in more than 20 countries.
During an earnings call, Amazon’s chief financial officer, Brian Olsavsky, said higher inflation, fuel prices and labor restrictions added $2 billion to costs compared with last year.
“The cost of shipping a container overseas has more than doubled from pre-pandemic levels,” he said. “Fuel costs are approximately one and a half times higher than even a year ago.”
The rise of the Omicron variant by the end of 2021 led to a “significant increase” in the number of employees taking leave, prompting Amazon to ramp up hiring to make up for the absences, Olsavsky said. But when workers returned as the variations dropped, “we quickly went from understaffed to overstaffed,” he added. That led to “lower productivity,” he said, and an additional $2 billion in costs.
Amazon’s earnings suffered as the company continued to face pressure from warehouse workers over issues like pay and working conditions. Workers at the Staten Island, New York warehouse, voted to form the US e-commerce giant’s first labor union earlier this month. Amazon has since filed an appeal, calling for a full vote.
A separate Amazon union election in Bessemer, Alabama, also ended recently with results too close to call.
Both union efforts stemmed from workers’ frustration with Amazon’s treatment of workers amid the pandemic and were also partly motivated by the nation’s interest in racial equity issues. and labor rights.
Amazon later announced that it would conduct a racial equity audit led by former US Attorney General Loretta Lynch.
