Amazon Shares Plunge as Company Reports Nearly $4 Billion Loss

The tech giant said revenue grew 7% from the same period last year to $116.4 billion, slightly better than analysts’ forecasts but slower than the 9% growth seen in the last few months of last year. The company forecast that sales growth would slow further next quarter and expects a growth rate of between 3% and 7%.

Amazon reported a net loss of $3.8 billion for the quarter ended March 31, a sharp decline from the same period last year when it made a profit of $8.1 billion. It was also a big miss from the $4.4 billion profit forecast by analysts surveyed by Refinitiv.

Excluding the Rivian loss, Amazon would have made a profit of $3.8 billion, which Refinitiv said still fell short of analysts’ expectations.

Amazon AMZN the stock fell about 10% in after-hours trading after the results.

“The pandemic and the ensuing war in Ukraine have led to unusual growth and challenges,” Amazon CEO Andy Jassy said in a statement.

Jassy referred to Amazon’s rapid growth in its consumer business during the pandemic and the “doubling” of the company’s fulfillment network over the past two years.

“Today, as we no longer chase physical or human capacity, our teams are fully focused on improving productivity and cost efficiency across our fulfillment network,” he added. “This may take some time, especially as we work on continued inflation and supply chain pressures, but we are seeing encouraging progress on a number of dimensions of the customer experience.”

The company also announced that Prime Day, its annual sales bonanza, will take place in more than 20 countries in July.

In an earnings call, Amazon chief financial officer Brian Olsavsky said higher inflation, fuel prices and labor restrictions added $2 billion in costs compared to last year.

“The cost of shipping an overseas container has more than doubled compared to pre-pandemic rates,” he said. “Fuel costs are about one and a half times higher than they were a year ago.”

The rise of the Omicron variant by the end of 2021 led to “a substantial increase” in the number of employees taking leave, prompting Amazon to hire more staff to make up for the absences, Olsavsky said. But when the workers returned when the variants disappeared, “we quickly switched from understaffed to overstaffed,” he added. That resulted in “lower productivity” that added another $2 billion in costs, he said.

Amazon’s profit drop comes as the company continues to pressure from its warehouse workers over things like pay and benefits. Earlier this month, workers at a warehouse in Staten Island, New York, voted to create the e-commerce giant’s first-ever US union. Amazon has since appealed, calling for a takeover of the entire vote.

A separate Amazon union election in Bessemer, Alabama, also ended recently with results too close to mention.

Both union efforts stemmed from workers’ frustrations over Amazon’s treatment of workers during the pandemic and were also motivated in part by increased national attention to racial justice issues and labor rights.

Amazon then announced it would conduct a racial equity audit led by former US Attorney General Loretta Lynch.

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