Amazon shares plunged 10% after the market closed on Thursday after reporting disappointing earnings for the first quarter of 2022.
The Seattle-based tech company reported a $3.8 billion net loss in the first quarter, compared to a net income of $8.1 billion in the same period last year. Amazon said that its first quarter performance includes a pre-tax valuation loss of $7.6 billion due to its investment in electric car company Rivian Automotive, resulting in the net loss.
Amazon also reported on Thursday that net sales increased 7% in the first quarter to $116.4 billion. This is compared to a 44% increase in the same period last year, marking the company’s slowest growth rate in more than two decades.
In a statement on Thursday, Amazon CEO Andy Jassy said that the war in Ukraine and inflation and supply chain pressures have hindered its business. “The pandemic and subsequent war in Ukraine have brought unusual growth and challenges,” Jassy said.
“Today, as we’re no longer chasing physical or staffing capacity, our teams are squarely focused on improving productivity and cost efficiencies throughout our fulfillment network,” added Jassy. “We know how to do this and have done it before. This may take some time, particularly as we work through ongoing inflationary and supply chain pressures, but we see encouraging progress on a number of customer experience dimensions, including delivery speed performance as we’re now approaching levels not seen since the months immediately preceding the pandemic in early 2020.”
On the other hand, the company’s Amazon Web Services (AWS) cloud-computing unit grew 34% annually over the last two years, and 37% year-over-year in the first quarter as the service became an “integral part in helping companies weather the pandemic and move more of their workloads into the cloud,” Jassy added.
Looking ahead, Amazon expects net sales to be between $116 billion and $121 billion, or to grow between 3% and 7% compared to the same period last year.
The company also confirmed on Thursday that its annual Prime Day will take place in the third quarter in July, which Amazon said may hurt its year-over-year comparisons in the second quarter having held the shopping event in June last year.