The stock of Amazon is falling surprisingly. The stock is trading as low as 8% after the news broke out that the giants of e-commerce are not doing so well. The profits of Amazon.com faces a surprising drop in its third quarter. The company misses the profit estimate by a remarkable margin and it also lowered its guidance for the fourth quarter.
The company revenues saw a rise of up to 23.7% every year but the earnings per share saw its losses. The shares decrease to about $4.23 and the annual profits decrease to 24% per year. Amazon seems to have been investing immensely in one-day delivery. And this is the shocking news of the season. This investment takes a heavy toll on the profitability of the company.
The Stock Drop
The stock drop was about $1,618. This was the lowest in seven months after the bounce of Bearish news on Friday. The cloud computing unit of Amazon was also not happy as there were only a few sales bookings that were not as per the expectation. The company discloses that it anticipates a subtle holiday quarter. It forecasts its sales to be around $80 billion to $86.5 billion during this time. Some analysts were supposing that it is going to be less than at least $87 billion.
The CEO’s Insight
The CEO of Amazon, Jeff Bezos reveals a statement regarding his one-day delivery investment. He mentions, “The customers have been loving the conversion of the delivery time for Amazon Prime members from two days to one day. Customers have already placed billions of orders this year with this facility”.
The CEO further continues, “The investment and big and is also the right one for customers. It is a long term decision. The decision is practical because when a customer places their order it is shipped from their nearest hub. This reduces carbon emission and eliminates any need or want to ship from a long road or air route. I owe a big thanks to all the delivery partners who make it possible to deliver in one day during the holiday season”.
Amazon was not exactly expecting this but as per the experts they will not fare as badly in their next quarter as most people fear. Despite their plunge initially they will be in a much better place in their fourth quarter.