NEW YORK (AP) — Amazon returned to profitability after two consecutive quarters of losses this year, but its stocks tanked in after-hours trading due to weaker than expected revenue as well as its disappointing projections for the fourth quarter.
The company reported revenue of $127.1 billion, less than the $127.4 billion analysts surveyed by FactSet had expected it to pull in from its array of businesses, including its online stores, fees it charges third-party sellers and its dominant cloud computing unit AWS.
One of the company’s major sales events this year, held in July for its Prime members, gave it a boost. In the past two quarters, Amazon’s revenue had grown at roughly 7%, its slowest in nearly two decades.
Amazon expects revenue for the fourth quarter to be between $140 billion and $148 billion, a growth of 2% and 8% compared with the fourth quarter of last year. Analysts surveyed by FactSet were expecting an estimate of $155.1 billion. The company says the guidance anticipates an unfavorable impact from fluctuations in foreign exchange rates.
Shares in Amazon.com Inc. fell almost 21% in after-hours trading.
Still, the e-commerce behemoth said it made a profit of $2.9 billion, or 28 cents per share, for the three-month period that ended on Sept. 30. That still a decline compared with a profit of $3.15 billion, or 31 cents per share, during the same period a year ago.
Amazon's results mimic those of other companies this week as the economy becomes tougher to navigate with high inflation and rising interest rates.
On Monday, Alphabet, the parent company of Google and YouTube, missed revenue expectations as advertisers pulled back their spending over fears about a potential recession. Microsoft posted a drop in profits amid weak computer sales.
And Meta, which owns Facebook and Instagram, reported a decline in revenue for a second consecutive quarter amid its own ad slump and concerns over whether the company is spending too much money on its idea of a metaverse. Both YouTube and Meta are also facing more competition from TikTok.