Amazon sinks as revenue growth disappoints

Amazon Falls After Missing Sales Forecast

The third-quarter results were the second time running that billionaire Jeff Bezos' firm had fallen short of sales targets and, allied to a similar disappointment from Google-owner Alphabet GOOGL.O , they sent a shockwave through stock markets.

For its part Amazon stock was down 8.66 percent ahead of Friday's opening, despite seeing its quarterly net profit grow ten-fold from a year earlier to $2.9 billion (roughly Rs. 21,200 crores).

Net income increased to $2.9 billion, compared to $256 million in third-quarter of 2017. Revenue came in below analysts projections.

She added, "It is not that the [Amazon] reported a decrease in income - on the contrary, profits were at a record high - but its sales nudged lower and more importantly its expectations for the all-important fourth quarter holiday shopping period came in a touch below consensus forecasts".

Our earlier story this week predicted Amazon's shares would begin to enter a bear market by falling 21% off their high, but Amazons' outlook has significantly deteriorated since then.

Alphabet shares lost ground after the earnings report and were down 5.04 percent in pre-market trading Friday.

Revenue from Amazon's global business, which brings in 27.5 percent of total sales, was at the heart of the shortfall in results, growth halving to 13.4 percent compared to the previous quarter. The Street wanted to hear $73.79 billion, but Amazon forecast between $66.5 billion and $72.5 billion.

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Investors' focus will be on the company's performance in its Web Services business, which is expected to be a major boost to the company's profitability. Revenue jumped 29 percent to $56.6 billion, below a projected $57.10 billion. This is pretty impressive considering Amazon's primary North American retail segment pulled in over $34 billion in sales yet AWS booked just shy of $6.7 billion! The company continues to increase wallet share with existing cloud customers, and acquisition remains strong evidenced by Amazon's healthy pipeline of new enterprise clients.

However, on Thursday night it said operating profits in the coming quarter could be as low as $2.1bn, flat with past year.

Amazon's employee base is up 13 percent over a year ago.

On the brighter side was data that showed gross domestic product increased at a 3.5 percent annualized rate in the third quarter as a tariff-related drop in soybean exports was partly offset by the strongest consumer spending in almost four years and a surge in inventory investment.

And the company continued to see success in advertising.

Amazon shares were down 4.7 percent to $1,697 at time of publication Thursday afternoon.

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