Jeff Bezos Loses $14 Billion as Amazon Stock Plunges

Amazon Q3 revenue

Amazon sinks as revenue growth disappoints

Amazon reported standout third-quarter earnings Thursday, but revenue and revenue guidance disappointed.

Wall Street was looking for earnings of $3.14 per share on revenue of $57.1 billion. Operating income will be US$2.1 billion to US$3.6 billion, Amazon said. That could signal weaker-than-expected consumer spending as the important holiday season approaches, indicated by Amazon's forecast that its fourth-quarter sales will fall short of analysts' expectations. Since the end of September, analysts have cut their 2019 revenue estimates by 1%.

It will cost Amazon an extra $333 million to fund its higher salaries during the fourth quarter, according to Cowen, a financial research company.

Against Amazon's $10bn, Google owner Alphabet alone generated ad revenues of $28.95bn in the third quarter - equivalent to a 20.3% increase from previous year.

Our earlier story this week predicted Amazon's shares would begin to enter a bear market by falling 21% off their high, but Amazons' outlook has significantly deteriorated since then.

Shares were set to open down nearly 9% on Friday. In the third quarter a year ago, Amazon pulled in $43.7 billion in sales.

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Q4 revenue (forecast): Between $66.5 billion and $US72.5 billion.

In a time of low interest rates, Amazon and Google have offered investors the chance to hitch a ride on the fast-growing e-commerce, digital advertising and cloud-computing markets buoyed by a steady global economy, Bloomberg explained.

While Amazon's sales forecast missed estimates, USA shoppers are projected to increase their online spending by as much as 22 per cent this holiday season, according to Deloitte Insights. That division saw sales jump 35% to $34.3 billion.

Revenue gained 29 per cent to $56.6 billion in the third quarter. "We expect Other revenue, which consists largely of advertising services, to reach $2.3B (105% y/y) in 3Q, though believe there's potential upside to our estimate given the company's increased focus on enhancing its ad product portfolio in recent quarters". The company continues to increase wallet share with existing cloud customers, and acquisition remains strong evidenced by Amazon's healthy pipeline of new enterprise clients. That purchase happened in the middle of the third quarter last year, which meant that Amazon included only about a month's worth of Whole Foods' revenue in its third-quarter results last year, versus a whole quarter's worth this time around.

The company now groups its advertising group under "other" on its balance sheet.

As of this writing, Amazon shares are rising almost 7% to $1,783.

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