amazon made a boat full of money during the first quarter of 2022. But investors, who have become accustomed to Amazon’s rocket trajectory during the pandemic, have not quite adjusted to the fact that it is no longer accelerating as quickly.
Despite posting $116.4 billion in sales from January to March this year — almost $8 billion year-over-year — Amazon shares took a nosedive in after-hours trading, falling about 10 percent before leveling off a bit more. .
The problem wasn’t that Amazon underperformed in the first quarter, but that Amazon projected a slower second quarter than analysts expected. Analysts wanted to see Amazon projecting $125.5 billion in sales, according CNBCbut instead, the company only expects sales to rise from $116 billion to $121 billion.
This isn’t a huge deal in the scheme of things, but it does illustrate the communication problem Amazon is facing right now. The company experienced such rapid growth during the early stages of the pandemic that it simply well Investors see growth right now as a sign of slowing progress.
Amazon CEO Andy Jassy tried to set expectations on your first letter to shareholders earlier this month, saying, “We realized three years’ worth of projected growth in about 15 months.”
However, analysts are not wrong that things are slowing down drastically at Amazon. The company reported 44% year-over-year growth in net sales for the first quarter of 2021 and just 7% growth for the first quarter of 2022. Obviously, that’s much lower: Compound Capital Advisors says this quarter marks the slowest Q1 growth in Amazon history. Amazon also reported its first quarterly loss since 2015largely due to a $7.6 billion loss on its investment in electric vehicle maker Rivian, which has seen its shares fall by more than half this year.
Amazon is now focused on “improving productivity and cost efficiency across our fulfillment network,” says Jassy. But she warns that “this may take some time.”
The company also announced today that celebrate Prime Day in July this year after celebrating it in June last year. That will fuel Amazon’s made-up vacation profit surge through the third quarter of 2022.
Amazon isn’t alone in facing shareholder trouble this year. What Bloombergby Steve Matthews points outall FAANG companies are experiencing declines: