Amazon announced its first loss since 2015 on Thursday as sales slowed, costs rose and its investment in electric vehicle company Rivian wiped out profits.
The news caused Amazon shares to fall 10% in trading after business hours.
The revenue of the technology giant grew by a slow 7% in the first quarter to 116.4 billion dollars. In the same quarter last year, Amazon’s sales increased 44% to $ 108.5 billion. It lost $ 3.8 billion in the quarter, compared to $ 8.1 billion in the same period a year ago.
The company warned that there may be more losses. For the current quarter, Amazon expects operating revenue between a loss of $ 1 billion and a profit of $ 3 billion, compared to $ 7.7 billion in the second quarter of 2021.
Amazon’s stake in electric vehicle company Rivian was largely to blame for the loss. Amazon owns nearly 20 percent of the company and lost $ 7.6 billion after shares of the electric vehicle collapsed, falling more than 50 percent.
“The pandemic and the ensuing war in Ukraine have brought extraordinary growth and challenges,” said Andy Jasi, Amazon’s chief executive.
Amazon was one of the biggest winners in the pandemic, recording huge sales spikes as consumers switched to online shopping and companies turned to Amazon Web Services (AWS), its cloud computing unit, to run its business. AWS sales increased 37% during the quarter.
As the vaccination rate against Covid-19 increased and hospitalizations decreased, buyers returned to bricks and mortar. In-store shopping rose 11.2 percent in March, while online fell 3.3 percent, according to Mastercard SpendingPulse, a monthly transaction report.
Amazon is not the only online retailer to feel the change. The share of online retail purchases fell from 15.7% in the second quarter of 2020 to 12.9% in the last three months of 2021, according to the Census Bureau. But according to a Mastercard study, online retailers have benefited significantly from the pandemic. E-commerce grew by more than 83% from March 2019 to March 2022 compared to a 9.4% growth rate for in-store shopping.
The company is facing additional pressure from employees across the country, who are pushing to unite and negotiate higher wages, better working conditions and benefits.
Earlier this month, Amazon workers in Staten Island, New York, were the first to vote for a union in the United States. Votes to form a union at Amazon’s second facility in New York will be counted on Monday, and organizers say they have been inundated with calls from other Amazon outposts to help them form unions.
“Today, as we no longer pursue physical or personal capacity, our teams are fully focused on improving productivity and cost-effectiveness throughout our implementation network. We know how to do this and we have done it before. This may take some time, especially when we are dealing with the continuing pressures of inflation and the supply chain, but we are seeing encouraging progress, “said Jassi.
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