Amazon posts 2Q loss but revenue tops estimates, stock jumps

Amazon lost USD 2.03 billion, or 20 cents per share, in the three-month period ended June 30, driven by a USD 3.9 billion write-down of the value of its stock investment in electric vehicle start-up Rivian Automotive.

That compared to a profit of USD 7.78 billion a year ago. It posted a loss of USD 3.84 billion in this year’s first quarter, its first quarterly loss since 2015, which was also marked by a large Rivian write-down. Analysts had been expecting a 12-cent profit in the latest quarter, according to FactSet.

But Wall Street was cheered by Amazon’s USD 121.2 billion in revenue, topping expectations of USD 119 billion. The results came as the company attempts to navigate shifting consumer demand and higher costs, while curtailing the glut of warehouses it acquired during the COVID-19 pandemic.

Shares in Amazon.com Inc. rose almost 14% in after-hours trading.

CEO Andy Jassy said in a statement that Amazon is seeing its revenue accelerate as it invests in its Prime membership and offers more benefits to members, such as its recent deal to give free access to meal delivery service Grubhub for a year.

Subscription services have grown 10% compared to the prior year. Some analysts estimate the company generated roughly USD 4.6 billion in revenue during its Prime Day shopping event, which it held during the second quarter last year but moved to the third in 2022. Amazon noted sales have also been dampened by foreign exchange rate fluctuations.

“Against this context, Amazon’s performance is reasonable enough – but it is still a very long way from the stellar numbers Amazon usually produces,” said Neil Saunders, managing director of GlobalData.

Jassy noted the company continues to feel inflationary pressure from higher energy and transportation costs, but it’s been making progress controlling expenses related to its fulfillment network.

Between 2019 and 2021, Amazon nearly doubled the number of warehouses and data centers it leased and owned to keep up with rising consumer demand. But as consumers shifted their habits, Amazon found itself with too many workers and too much space, which added billions in extra costs. The company has been subleasing some of its warehouses, ending some of its leases and deferring construction on others to deal with the problem.

Amazon’s Chief Financial Officer Brian Olsavsky said during a media call Thursday the company is slowing down its expansion plans for this year and the next to better align with customer demand. He said the company is also planning to shift capital investments towards its cloud-computing unit AWS.

Amazon’s retail operations both internationally and in North America reported operating losses, showing the company is suffering the same fate as Walmart and Target, Saunders said. Costs are outpacing sales and growth, though Amazon can dip into other profit pools – like AWS – to protect its overall performance, he said.

AWS, which is facing increasing competition from Microsoft Azure, earned USD 19.74 billion in revenue, a 33% jump from last year. While Amazon’s advertising unit, another burgeoning moneymaker, pulled in USD 8.76 billion, an 18% increase from last year.