Arthur J. Villasanta – Fourth Estate Contributor
Seattle, WA, United States (4E) – Amazon.com, which on Sept. 4 briefly crossed the fabled market cap of $1 trillion, continued to withdraw from this pinnacle, with its stock falling 19% or $200 billion over the weekend.
Analysts said Amazon’s unexpected slide is partially due to the overall slump in the stock market, which took a savage beating over the past two weeks before recovering somewhat last Friday. Amazon’s stock dropped nearly 8 percent Friday but regained 2% in after-hours trading.
The company reported lower than expected revenues in the third quarter and released guidance for the fourth quarter lower than that expected by financial analysts.
Amazon’s distressing market performance is all the more baffling considering the company posted record profits for the third quarter thanks to businesses like Amazon Web Services and advertising. Its third quarter revenues rose 29% to $56.6 billion but remained below market expectations ranging from $66.5 billion to $72.5 billion. Amazon’s stock slid and at one point fell by as much as much as 10%.
Amazon said its net sales increased 29% to $56.6 billion in the third quarter compared to $43.7 billion in Q3 2017. Excluding the $260 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 30% compared with third quarter 2017.
Operating income improved to $3.7 billion in Q3 compared to $347 million year-on-year. Net income increased to $2.9 billion, or $5.75 per diluted share, compared to $256 million, or $0.52 per diluted share, in third quarter 2017.
“Amazon Business has now reached a $10 billion annual sales run rate and is serving millions of private and public-sector organizations in eight countries,” said CEO Jeff Bezos.
“And we’re not slowing down — Amazon Business is adding customers rapidly, including large educational institutions, local governments, and more than half of the Fortune 100. These organizations are choosing Amazon Business because it increases transparency into business spending and streamlines purchasing, with increased control. The team is doing a fantastic job building and innovating for customers.”
For this fourth quarter, Amazon projects its net sales to increase between $66.5 billion and $72.5 billion, or to grow between 10% and 20% compared with fourth quarter 2017. This guidance anticipates an unfavorable impact of 80 basis points from foreign exchange rates.
Operating income is expected to be between $2.1 billion and $3.6 billion compared to $2.1 billion in fourth quarter 2017.
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