Amazon’s Q3 Results Are Out, But Shareholders Aren’t Happy

April Davis By April Davis | 26 Oct 2018

Amazon released its Q3 sales results on Thursday, as well as its profit guidance for Q4. Despite strong revenue growth over the last three months, the company’s stock has taken a hit as projections for the holiday season fall short.

Wall Street was less than impressed by Amazon’s Q3 earnings, despite the business increasing its net sales by 29 percent over the last quarter. The e-commerce juggernaut reported total net sales of $56.6 billion in Q3, compared to $43.7 billion in the same period last year.
Analysts had been predicting a per-share profit six times larger than the same period last year. According to the company’s results, per-share profit exceeded these predictions.
Chairman and CEO, Jeff Bezos, said this growth is largely attributed to the success of Amazon Business, as North American retail and Amazon Web Services boosted its revenue for the quarter.
“Amazon Business has now reached a $10 billion annual sales run rate and is serving millions of private and public-sector organisations in eight countries,” he said. “And we’re not slowing down.”
“Amazon Business is adding customers rapidly, including large educational institutions, local governments, and more than half of the Fortune 100.”
“The team is doing a fantastic job building and innovating customers,” he said.
Amazon also benefitted from strong Prime sales over the quarter, with its overall subscription revenue growing 52 percent year-on-year. This revenue includes Prime, Audible.com and Amazon Music.
These positive results, however, were shadowed by a lower than expected profit guidance for Q4, with the company predicting holiday sales lower than analysts were anticipating.
In its 2018 fourth quarter guidance, Amazon estimated net sales to be between $66.5 billion and $72.5 billion, equating to a growth of ten to 20 percent over the quarter. These predictions fall short of analysts earlier forecasts of $US73.8 billion. As a result, shares declined by 6.5 percent in extended trading.
The results were surprising to many, as Deloitte Insights had predicted a 22 percent increase in online spending in the US over the festive period, with onlookers assuming Amazon would benefit from this boost in sales.
This year, Amazon’s stock had jumped by roughly 50 percent, but this growth has been on the decline since September, dropping by around 15 percent amid broader market downturn, closing at $US1,782.17.
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