Amazon shares fall after profit doubles

Internet Retailing

29th Jan 2016

Amazon shares have tumbled in aftermarket trading after the e-commerce company said its profit has more than doubled, but it still fell well short of analyst expectations.

Amazon’s strategy has long been to invest most of the money it makes back into its businesses, particularly by expanding offerings in its $US99-a-year Prime loyalty program and its cloud-computing business, called Amazon Web Services.

After operating at or near a loss for years, it has finally also demonstrated the ability to turn a consistent profit recently.

Yet it wasn’t able to match investor expectations in the fourth quarter.

The Seattle company’s net income more than doubled to $US482 million ($A680.69 million), or $US1 per share, from $US214 million, or 45 US cents per share in 2015. But that fell far short of the $US1.55 analysts expected, according to FactSet.

Shares sank 14 per cent in aftermarket trading.

Amazon’s revenue rose 22 per cent to $US35.75 billion from $US29.33 billion the previous year. That figure also fell short of estimates, which averaged $US39.9 billion.

For the current quarter ending in March, Amazon said it expects revenue in the range of $US26.5 billion to $US29 billion. Analysts surveyed by Zacks had expected revenue of $US27.47 billion.

Amazon shares have declined 6.5 per cent since the beginning of 2016, while the Standard & Poor’s 500 index has fallen slightly more than seven per cent.

In the final minutes of trading on Thursday, Amazon’s stock hit $US632.20, having more than doubled in the previous 12 months.

AP