Amazon stock sunk like a stone Thursday afternoon on news that the company’s third-quarter profits were half of last year’s, and the online-retail giant missed Wall Street’s targets. Making matters worse, Amazon’s new CEO Andy Jassy warned of “ several billion dollars of additional costs” for the upcoming holiday season, pointing to a labor shortage and supply chain issues.
We’ll worry about that in a bit though. Amazon’s sales from the recently wrapped quarter were up from 2020 — just not enough.
Amazon’s third-quarter 2021 net sales were $110.8 billion, a 15% increase from the comparable three-month period last year. Still, the sales figure missed Wall Street’s consensus estimate of $111.6 billion. Whiffing worse was the Prime Video home’s earnings per share (EPS) number: the $6.12 Amazon reported was pretty short of the $8.92 that media analysts expected to see.
While shares of AMZN dropped $180 apiece within the first 30 minutes after the regular end to Thursday’s trading, that *only* represents about 5% to the incredibly pricey stock. Not that our basic math is going to be of much comfort to investors.
Amazon stock (AMZN) closed Thursday afternoon at $3,446.57 per share. The U.S. stock markets will reopen Friday at 9:30 a.m. ET.
“We’ve always said that when confronted with the choice between optimizing for short-term profits versus what’s best for customers over the long term, we will choose the latter—and you can see that during every phase of this pandemic,” Jassy said in a statement accompanying the financials “In the first several months of COVID-19, Amazonians played an essential role to help people secure the requisite PPE, food, and other in-demand items needed, and we worked closely with businesses and governments to leverage AWS to maintain business continuity as they responded to the pandemic. Customers have appreciated this commitment, which is part of what’s driving this past quarter’s AWS growth acceleration to 39% year over year; but, it’s also driven extraordinary investments across our businesses to satisfy customer needs—just one example is that we’ve nearly doubled the size of our fulfillment network since the pandemic began.”
It sounds like things will likely get worse before they get better.
“In the fourth quarter, we expect to incur several billion dollars of additional costs in our Consumer business as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs—all while doing whatever it takes to minimize the impact on customers and selling partners this holiday season,” Jeff Bezos’ successor continued. “It’ll be expensive for us in the short term, but it’s the right prioritization for our customers and partners.”
We appreciate that, Andy.
Amazon is certainly not alone with those supply chain woes — Apple also suffered a bad miss on earnings this afternoon. Read all about that one here.
Last quarter was the final one with Bezos in the CEO role. Jassy and other top Amazon executives will host a conference call at 5:30 p.m. ET to discuss the quarter in greater detail.
Let’s throw Jassy a bone in his first quarter as chief executive officer: At least Q3 had Camila Cabello’s “Cinderella” on Amazon Prime Video, which is the No. 1 streamed musical of 2021. Sorry, we guess, “In the Heights.”