Amazon announces lower than expected Q1 2022 results, shares drop by 10%

Amazon Inc. announced its first quarter results of this year, on Thursday, that were bleak when compared to forecasts. This is the first time the e-commerce giant has posted a loss in seven years. The company attributed its losses due to a decrease in online shopping, rising inflation, supply chain disruptions, market shake ups on electric vehicle startups as well as the war in Ukraine. Amazon shares fell by up to 10 percent in extended trading on the same day.

The results reported by Amazon are as follows:

Operating cash flow decreased by 41 percent to $39.3 billion for twelve months. It was reported to be $67.2 billion for twelve months ending on March 31, 2021.

Free cash flow was also lower at an outflow of $18.6 billion when compared with a reported inflow of $26.4 billion for twelve months ending on March 31, 2021.

Net sales increased 7 percent to $116.4 billion in the first quarter of 2022 when compared with first quarter of 2021 which was lower at $108.5 billion.

Operating income was lower at $3.7 billion when compared with the first quarter of 2021 operating income of $8.9 billion.

The net loss was $3.8 billion. The first quarter 2022 included a net loss due to pre-tax valuation loss of $7.6 billion that included non-operating expenses due to the company’s common stock investment in the electric vehicle startup Rivian Automotive, Inc. The net income was $8.1 billion in the first quarter of last year.

Amazon’s first quarter results fell short of estimates by Wall Street analysts. Refinitiv said that the company was expected to have a earnings per share (EPS) of $8.36 but the company’s adjusted EPS was $7.38. According to Refinitiv, the company was expected to generate a revenue of $116.3 billion and the reported revenue was higher at $116.44 billion.

This quarter marks the slowest rate and second straight period at Amazon where the growth has been in single digits. The second quarter forecast might dip further as the company has already shifted its Amazon Prime sale, one of its highest earnings time period every year, from June to July. The potentially high earnings in this July sale, will now be reflected in the third quarter of 2022.

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