In premarket trading on Friday, Amazon stock tumbled nearly 5% as the online retail giant warned it could wind up making no operating profit in the current quarter due to extraordinary spending to satisfy demand during the busy holiday season.
In the third quarter, operating income was $4.9 billion. As it deals with workforce shortages, higher wages, global supply chain challenges, and higher freight and shipping expenses, CEO Andy Jassy said the company expects to incur several billion dollars in additional expenditures in its consumer division.
Even though the firm expected at least $130 billion in sales for the period, it has issued a dismal forecast. According to the company's predictions for the October-December quarter, sales might reach $140 billion, with operating profit of little more than $3 billion, less than half of the $6.9 billion in the 2020 period.
As more customers shopped online for clothes, gadgets, and books, and corporations sought its Cloud services to run their operations, nearly every division of the company benefitted from the pandemic-driven demand. That rapid growth was certain to slow at some point, but the company is currently grappling with labor and supply issues, both internally and with its customers.
The company's net revenues increased 15% to $110.8 billion in the third quarter. The net profit of $3.2 billion was approximately half of what it was the previous year. Both came up short of expectations.
Amazon's cloud computing sector had a 39% increase in revenue to $16.11 billion.