Amazon shares news: Stock slides post-close amid disappointing Christmas forecast

Amazon shares are lower in out-of-hours trading, after the tech giant's record profits and strong AWS performance failed to impress investors.

Amazon shares news: Stock slides post-close amid disappointing Christmas forecast

Amazon shares closed higher in the US Thursday, before sliding into the red in after-hours activity following the publication of the tech giant’s third-quarter earnings. While the firm’s Amazon Web Services unit performed strongly, investors were less impressed with a total revenue miss and subdued Christmas sales forecast.

Amazon shares ended the US Thursday trading session 7.09% higher at $1,782.17. However, the stock dropped once its Q3 earnings were released after the closing bell and remain over 7% lower.

Amazon Q3 earnings

Amazon reported Thursday, that its third quarter total revenues hit $56.6 billion, up 29% from $43.7 billion in the same period a year earlier. Net income, meanwhile, increased to a fresh record high of $2.9 billion, or $5.75 per diluted share, compared with $256 million, or $0.52 per diluted share, in Q3 2017.

“Amazon Business has now reached a $10 billion annual sales run rate and is serving millions of private and public-sector organizations in eight countries,” said Amazon founder and CEO, Jeff Bezos.

“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,” Bezos added.

AWS

Amazon’s cloud unit, AWS posted an impressive $6.68 billion revenue in the third quarter, up 46% from a year earlier making up some 12% of the tech behemoth’s total revenues. The AWS operating income meanwhile, hit $2.1 billion and accounted for more than half of its total operating income.

Amazon’s AWS unit continues to dwarf its competitors. However, the rate of growth reported by Microsoft and Google Cloud are both above Amazon’s performance.

Elsewhere, Amazon issued its fourth quarter outlook and the numbers weren’t as upbeat as had been expected. Bezos’ business said it expects:

  • Net sales growth of between 10-20% to $66.5 billion - $72.5 billion.
  • Operating income of $2.1 billion-to-$3.6 billion.

However, Amazon’s CFO, Brian T. Olsavsky told analysts on an earnings call that Amazon is in a strong position for the holiday sales season.

“In-stock is very strong, especially as we head into the holiday period,” Olsavsky said in answer to a question. “I think we're well positioned for the holiday. We have over 100 million Prime eligible items that are available for FREE Two-Day Shipping for Prime members.”

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