Amazon posted a first-quarter loss as the receding pandemic tried to steer consumers away from online shopping and a sour investment in Rivian Automotive resulted in “non-operating expenses” of $7.6 billion.
The e-commerce giant said product sales fell 1.8% and revenue from sellers on its marketplace fell 1% in the quarter ended March 31, as it did .. The decline in performance reflects the loosening grip of the COVID-19 pandemic and the return of consumers to physical stores.
Amazon was also affected by the decline in the price of Rivian shares. The company invested in the electric truck maker ahead of its IPO. Although Rivian shares initially surged and peaked at around $180, the stock price has since fallen to around $32 per share.
The company said strong growth is unlikely to return soon given the state of the global economy and the war in Ukraine. Amazon expects second-quarter operating profit to be between a loss of $1 billion and a profit of $3 billion. A year earlier, the company had reported an operating profit of $7.7 billion.
The earnings performance comes after Amazon warned in its annual shareholder letter that costs were squeezing its margins. Fuel costs, which have skyrocketed since Russia invaded Ukraine, have been cited as a particular culprit. The companyat fees paid by third-party sellers who use Fulfillment By Amazon in March.
“The pandemic and subsequent war in Ukraine has brought about unusual growth and challenges,” CEO Andy Jassy said in a statement.
Amazon’s stock price fell more than 11% in after-hours trading after the company released its report.
In the first quarter, Amazon posted a loss of $7.56 per share, far from the earnings per share of $8.36, analysts had expected. The performance was a far cry from the $15.79 in earnings per share the company posted in the same quarter last year.
Revenue rose 7% from a year ago to $116.4 billion. That beat the $116.3 billion forecast by analysts, according to Yahoo.
Amazon’s operating profit, which excludes its investment in Rivian in addition to taxes and interest payments, fell to $3.7 billion from $8.9 billion a year earlier. Brian Olsavsky, Amazon’s chief financial officer, said Thursday that the company has largely expanded its warehouse capacity since the start of the pandemic to meet demand, but now the increase in warehouses has exceeded demand.
“Put simply, the cost of running Amazon – which was already high – is getting significantly more expensive,” said Neil Saunders, retail analyst at Global Data.
The company said Prime Day, its annual shopping holiday, would likely be. Last year, Prime Day took place at the end of June.